CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY

AIR RESOURCES BOARD

STAFF REPORT: INITIAL STATEMENT OF REASONS

ADVANCED CLEAN CARS

2012 PROPOSED AMENDMENTS TO THE 

CALIFORNIA ZERO EMISSION VEHICLE PROGRAM REGULATIONS

This report has been reviewed by the staff of the California Air Resources Board 

and approved for publication. Approval does not signify that the contents 

necessarily reflect the views and policies of the Air Resources Board, nor does 

the mention of trade names or commercial products constitute endorsement or 

recommendation for use.

 Date of Release: December 7, 2011

 Scheduled for Consideration: January 26-27, 2012
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EXECUTIVE SUMMARY

In 1990, the California Air Resources Board (ARB or the Board) adopted an ambitious 

program to significantly reduce the environmental impact of light-duty vehicles through 

the commercial introduction of zero emission vehicles (ZEV) into the California fleet. 

Since then the requirements of the ZEV program have resulted in several important 

milestones being achieved. Many gasoline engines now emit at near zero emission 

levels of smog-forming emissions. Non-plug-in hybrid electric vehicles (HEV) have 

been commercialized, and the number of models offered for sale is quickly expanding. 

Recently, battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) 

have been introduced for sale, and fuel cell electric vehicles (FCV) are expected to be 

sold beginning in 2015. This movement to commercialize advanced clean cars has 

occurred in large part because of the ZEV regulation.

The ZEV regulation, which affects passenger cars and light-duty trucks, remains 

critically important to California’s efforts to meet health based air quality goals. More 

recently, the program’s goals have evolved to also include paving the way for achieving 

California’s long term climate change emission reduction goals. For these reasons, 

California remains committed to the commercialization of ZEV technologies.

At its March 2008 hearing, the Board directed staff to redesign the 2015 and 

subsequent model year requirements for the ZEV regulation. It directed staff to 

strengthen the regulation above what is currently required and focus primarily on the 

zero emission drive, that is BEV, hydrogen FCV, and PHEV technologies. The goal of 

the Board direction was to ensure California as the central location for moving 

advanced, low greenhouse gas (GHG) technology vehicles from the demonstration 

phase to commercialization. 

In 2009, staff undertook an analysis of pathways to meeting California’s long term 2050 

GHG reduction goals in the light duty vehicle subsector.1

 The analysis showed ZEVs 

will need to reach nearly 100 percent of new vehicle sales between 2040 and 2050, with 

commercial markets for ZEVs launching in the 2015 to 2020 timeframe. The analysis 

concluded that even widespread adoption of advanced conventional technologies, like 

non-plug-in HEVs, will not be enough to meet the 2050 targets. Staff presented its 

findings at the December 2009 Board hearing. 

At the December hearing, the Board adopted Resolution 09-66, reaffirming its 

commitment to meeting California’s long term air quality and climate change reduction 

goals through commercialization of ZEV technologies. The Board further directed staff 

to consider shifting the focus of the ZEV regulation to both GHG and criteria pollutant 

emission reductions, commercializing ZEVs and PHEVs in order to meet the 2050 

goals, and to take into consideration the new Low Emission Vehicle (LEV III) fleet 

standards and propose revisions to the ZEV regulation accordingly. 

 1 California Governor Arnold Schwarzenegger enacted Executive Order S-03-05, requiring a reduction in state-wide 

GHG emissions to 80-percent below 1990 levels by 2050
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This rulemaking is an opportunity for the Board to commit to the transformation of 

California’s light-duty vehicle fleet. As the technology-forcing piece of the 

Advanced Clean Car package, the ZEV regulation along with new LEV III criteria 

pollutant and GHG standards can be the catalyst to that transformative process. 

Proposed amendments to the regulation focus on technologies that help meet long term 

emission reduction goals, simplify the program where needed, and increase 

requirements for 2018 and subsequent model years.

Proposed Amendments to the Regulations

2009 through 2017 Model Year Amendments

Staff’s goal for amendments affecting the current ZEV regulation through 2017 model 

year is to make minor mid-course corrections and clarifications, and enable 

manufacturers to successfully meet 2018 and subsequent model year requirements. 

The amendments include:

A. Provide Compliance Flexibility: Remove carry forward credit limitations for ZEVs, 

allowing manufacturers to bank ZEV credits indefinitely for use in later years. 

Slightly reduce the 2015 through 2017 credit requirement for intermediate volume 

manufacturers (IVM, less than 60,000 vehicles produced each year), to allow 

them to prepare for requirements in 2018. Extend the provision that allows ZEVs 

placed in any state that has adopted the California ZEV regulation to count 

towards the ZEV requirement through 2017 (i.e. extending the “travel provision” 

for BEVs through 2017). 

B. Adjust Credits and Allowances: Increase credits for Type V (300 mile FCV) 

ZEVs to appropriately incentivize this longer term technology. 

C. Add New Vehicle Category: Add Type I.5x and Type IIx vehicles as a 

compliance option for manufacturers to meet up to half of their minimum ZEV 

requirement. The proposed vehicle is closer to a BEV than to a PHEV: a vehicle 

with primarily zero-emission operation equipped with a small non-ZEV fuel 

auxiliary power unit (APU) for limited range extension.

2018 and Subsequent Model Year Amendments

Staff’s goal for the proposed amendments for 2018 and subsequent model years is to 

achieve ZEV and transitional zero emission vehicle (TZEV; most commonly a PHEV) 

commercialization through simplifying the regulation and pushing technology to higher 

volume production in order to achieve cost reductions. The amendments include:

A. Increase Requirement for 2018 and Subsequent Model Years. Increase 

requirements which push ZEVs and TZEVs to over 15 percent of new sales by 

2025. This will ensure production volumes are at a level sufficient to bring 
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battery and fuel cell technology down the cost curve and reduce incremental ZEV 

prices. 

B. Focus Regulation on ZEVs and Transitional Zero Emission Vehicles (TZEV): 

Remove partial zero emission allowance vehicle (PZEV, near-zero emitting 

conventional technologies) and advanced technology partial zero emission 

allowance vehicle (AT PZEV, typically non-plug-in HEVs) credits as compliance 

options for manufacturers because these technologies are now commercialized 

and their emissions are better reflected in the LEV III program. Allow 

manufacturers to use banked PZEV and AT PZEV credits earned in 2017 and 

previous model years, but discount the credits, and place a cap on usage in 2018 

and subsequent model years. Focus the 2018 and subsequent model year 

requirements on ZEVs and TZEVs 

C. Amend Manufacturer Size Definitions, Ownership Requirements, and 

Transitions. Amend IVM and large volume manufacturer (LVM) size definitions 

to bring all but the smallest manufacturers under the full ZEV requirements by 

model year 2018. Align LEV III and ZEV ownership requirements, so that 

manufacturers who own more than 33.4 percent of each other are considered as 

the same manufacturer for determination of size. Modify transition periods for 

manufacturers switching size categories. These changes result in applying the 

ZEV regulation to manufacturers that represent 97 percent of the light duty 

vehicle market.

D. Modify Credit System. Base credits for ZEVs on range, with 50 mile BEVs 

earning 1 credit each and 350 mile FCVs earning 4 credits each. Allow extended

range BEVs (BEVx) which have a limited combustion engine range extender to 

meet up to half of a manufacturer’s minimum ZEV requirement. The range of 

credits reflects the utility of the vehicle (i.e. the zero emitting miles it may travel) 

and its expected timing for commercialization. Simplify and streamline TZEV 

credit based on the vehicle’s zero-emission range capability, and ability to 

perform 10 miles on the more aggressive US06 drive schedule. In addition to 

simplifying the program, reducing the spread of credits makes the technologies 

more evenly treated and reduces the variation in compliance outcomes (numbers 

of vehicles produced to meet the regulation requirements).

E. Modify Travel Provision: End the Travel Provision for BEVs after model year 

2017. Extend the Travel Provision for FCVs until sufficient complementary 

polices are in place in states that have adopted the California ZEV regulation. 

This will allow FCV technology to continue to mature, and provide time for 
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Section 177 States to build infrastructure and put in place incentives to foster 

FCVs.

 

F. Add GHG-ZEV Over-Compliance Credits: Allow manufacturers who 

systematically over comply with the proposed LEV III GHG fleet standard to 

offset a portion of their ZEV requirement in 2018 through 2021 model years only. 

Effect of Proposed Amendments

As a result of staff’s proposal, over 1.4 million ZEVs and TZEVs are expected to be 

produced cumulatively in California by 2025, with 500,000 of those vehicles being pure 

ZEVs (BEVs and FCVs). 

Expected ZEV Regulation Compliance for 2018 through 2025 Model Years

During this time frame, the incremental price of a ZEV or TZEV is expected to rapidly 

decline, but remain higher than a conventional vehicle, by approximately $10,000 (highend estimate). 

The proposed amendments will also result in an emissions benefit as compared to the 

current regulations, and will likely provide benefits beyond that achieved by complying 

with the LEV III criteria pollutant standard with conventional vehicles only. This is due to 

increased electricity and hydrogen use, and subsequently decreased gasoline 

production and refinery emissions. 

 -

 50,000

 100,000

 150,000

 200,000

 250,000

 300,000

2018 2019 2020 2021 2022 2023 2024 2025

Annual California Sales

Model Year

17%

14%

11%

9%

6%

3%

% of 2025 Sales

15.4% of 2025

New Sales

FCVs

BEVs

TZEVs
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Advanced Clean Cars

Continuing its leadership role in the development of innovative and ground breaking 

emission control programs and to achieve California’s goals of meeting ambient air 

quality standards and reducing climate changing GHG emissions, ARB has developed 

the Advanced Clean Cars (ACC) program. The ACC program combines the control of 

smog-causing pollutants and GHG emissions into a single coordinated package of 

requirements for model years 2015 through 2025 and assures the development of 

environmentally superior cars that will continue to deliver the performance, utility and

safety car owners have come to expect. The ZEV regulation (with amendments 

proposed herein) will act as the technology forcing piece of the ACC program, pushing 

manufacturers to produce ZEVs and PHEVs in the 2018 through 2025 model years. In 

addition, the ACC program also includes amendments to the Clean Fuels Outlet (CFO) 

requirements that will assure that ultra-clean fuels such as hydrogen are available to 

meet vehicle demands brought on by amendments to the ZEV regulation. 

Beyond 2025, the driving force for lower emissions will be climate change. In order to 

meet our 2050 GHG goal, the new vehicle feet will need to be primarily composed of 

advanced technology vehicles such as electric and FCVs by 2035 in order to address 

fleet turnover. Accordingly, the ACC program coordinates the goals of the LEV, ZEV, 

and CFO programs in order to lay the foundation for commercialization and support of 

ultra-clean vehicles. 

A more complete description of the impacts and benefits of the ACC can be found in the 

LEV staff report, including in its Executive Summary. 

Staff Recommendation

Staff recommends that the Board adopt the amendments as proposed in this 

Initial Statement of Reasons (ISOR). The proposed amendments will help support 

future commercialization of ZEVs and TZEVs through simplification of the regulation 

and increasing requirements in 2018 and subsequent model years. 
TABLE OF CONTENTS

1 INTRODUCTION...................................................................................................... 1

1.1 ZEV PROGRAM OBJECTIVES (OVERALL SUMMARY)................................................. 2

1.2 AIR QUALITY AND CLIMATE CHANGE IN CALIFORNIA................................................. 3

1.3 ZEV PROGRAM HISTORY ...................................................................................... 5

1.4 2008 AMENDMENTS AND 2009 TECHNOLOGY REVIEW............................................. 6

1.5 THE CURRENT PROGRAM...................................................................................... 8

2 SUMMARY OF PROPOSED AMENDMENTS....................................................... 13

2.1 PART I: MODEL YEAR 2012 THROUGH 2017 AMENDMENTS.................................... 13

2.2 PART II: 2018 AND SUBSEQUENT MODEL YEAR AMENDMENTS ............................... 25

3 EFFECT OF PROPOSED CHANGES................................................................... 44

3.1 OVERALL EFFECTS OF MANUFACTURER’S BANKED ZEV CREDITS .......................... 44

3.2 EFFECTS OF PROPOSED CHANGES: 2009 THROUGH 2017 MODEL YEARS .............. 46

3.3 EFFECTS OF PROPOSED CHANGES: 2018 AND SUBSEQUENT MODEL YEARS........... 46

3.4 EFFECTS OF PROPOSED CHANGES: TRAVEL PROVISION ........................................ 51

4 REGULATORY ALTERNATIVES.......................................................................... 53

4.1 ALTERNATIVE A: LOWER ZEV REQUIREMENTS...................................................... 53

4.2 ALTERNATIVE B: HIGHER ZEV REQUIREMENTS..................................................... 54

4.3 ALTERNATIVE C: DO NOT AMEND PROGRAM......................................................... 54

5 ECONOMIC IMPACTS .......................................................................................... 55

5.1 LEGAL REQUIREMENT ......................................................................................... 55

5.2 DIRECTLY AFFECTED BUSINESSES....................................................................... 55

5.3 POTENTIAL IMPACTS TO INDIVIDUALS (CAR BUYERS) ............................................. 64

5.4 POTENTIAL IMPACT ON BUSINESS COMPETITIVENESS ............................................ 68

5.5 POTENTIAL IMPACT ON BUSINESS CREATION, ELIMINATION OR EXPANSION ............. 68

5.6 POTENTIAL COSTS TO LOCAL AND STATE AGENCIES ............................................. 70

6 EMISSIONS AND HEALTH IMPACTS.................................................................. 72

6.1 CALIFORNIA ENVIRONMENTAL QUALITY ACT ......................................................... 73

6.2 IMPACTS TO MINORITY AND LOW INCOME COMMUNITIES ........................................ 73

6.3 HEALTH IMPACTS................................................................................................ 74

6.4 EMISSIONS IMPACTS ........................................................................................... 75

7 COST-EFFECTIVENESS ...................................................................................... 80

8 SUMMARY AND STAFF RECOMMENDATION ................................................... 81

9 SUMMARY AND RATIONALE FOR PROPOSED REGULATIONS ..................... 83

10 REFERENCES................................................................................................. 107
APPENDIX A: PROPOSED REGULATION ORDER: AMENDMENTS TO THE 

ZERO-EMISSION VEHICLE REGULATION

Appendix A-1. §1962.1 Zero Emission Vehicle Standards for 2009 through 2017 

Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles 

Appendix A-2. California Exhaust Emission Standards and Test Procedures for 

2009 through 2017 Model Zero-Emission Vehicles and Hybrid Electric Vehicles, 

in the Passenger Car, Light-Duty Truck and Medium-Duty Vehicle Classes

Appendix A-3. §1962.2 Zero Emission Vehicle Standards for 2018 and 

subsequent Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty 

Vehicles

Appendix A-4. California Exhaust Emission Standards and Test Procedures for 

2018 and subsequent Model Zero-Emission Vehicles and Hybrid Electric 

Vehicles, in the Passenger Car, Light-Duty Truck and Medium-Duty Vehicle 

Classes

Appendix A-5. §1962.3 California Vehicle Charging Requirements

APPENDIX B: ENVIRONMENTAL ANALYSIS FOR ADVANCE CLEAN CARS 

REGULATION PACKAGE

APPENDIX C: ECONOMIC ANALYSIS INPUTS 
Table of Acronyms

AB ............... Assembly Bill

ACC............. Advanced Clean Car

APU............. Auxiliary Power Unit

ARB ............ California Air Resources Board

AT PZEV .... Advanced Technology Partial Zero Emission Allowance Vehicle, typically 

a non-plug in hybrid such as the Prius

BEV............. Battery Electric Vehicle

BEVx ........... Range Extended Battery Electric Vehicle

CAFE........... Corporate Average Fuel Economy

CEC............. California Energy Commission 

CEQA.......... California Environmental Quality Act

CO2 ............. Carbon Dioxide

CPUC.......... California Public Utilities Commission

DC............... Direct Current

E-DRAM...... Economic Dynamic Revenue Assessment Model 

EA ............... Joint Environmental Assessment for Advanced Clean Car Rulemaking

EAER ......... Equivalent All Electric Range

EMFAC ....... ARB’s mobile emissions inventory modeling program

Enhanced AT PZEV... Enhanced Advanced Technology Partial Zero Emission 

Allowance Vehicle, now called a Transitional Zero Emission Vehicle or 

TZEV 

EPL ............. Environmental Performance Label

EPRI............ Electric Power Research Institute

EU ............... European Union

EVSE........... Electric Vehicle Supply Equipment

FCV............. Fuel Cell Electric Vehicle

FSOR .......... Final Statement of Reasons

g/mi ............. grams per mile

gCO2/mi ...... grams carbon dioxide per mile

GHG............ Greenhouse Gas

HEV............. Hybrid electric vehicle (non plug-in)

HICE............ Hydrogen Internal Combustion Engine 

ICM.............. Indirect Cost Multiplier

ILVM............ Independent Low Volume Manufacturer

ISOR .......... Initial Statement of Reasons

IVM.............. Intermediate Vehicle Manufacturer

kW............... Kilowatt

LCFS........... Low Carbon Fuel Standard

LDT ............. Light- Duty Truck with loaded vehicle weight up to 8500 pounds

LEV I .......... First generation Low Emission Vehicle program, adopted in a 1990-1991 

rulemaking, and generally applicable in the 1994-2003 model years

LEV II ......... Second generation Low Emission Vehicle program, adopted in a 

1998 -1999 rulemaking, and generally applicable in the 2004 and 

subsequent model years
LEV III ......... Third generation Low Emission Vehicle program (criteria pollutant and 

greenhouse gas emission fleet standards), proposed as part of the 

Advanced Clean Cars rulemaking package in 2012, and generally 

applicable to 2015 and subsequent model years for Criteria Pollutants, 

and applicable to 2017 and subsequent model years for Greenhouse 

Gases. 

MDV ............ Medium Duty Vehicle

MMT............ Million Metric Tonnes

MOA ........... Memorandum of Agreement

NAS............. National Academy of Sciences

NEV............. Neighborhood Electric Vehicle

NHTSA........ National Highway Traffic Safety Administration

NMOG ........ Non-Methane Organic Gas

NOx ............ Oxides of Nitrogen

NMOG+ NOx...Non-Methane Organic Gas plus Oxides of Nitrogen

PC ............... Passenger Car

PHEV ......... Plug-in Hybrid-Electric Vehicle

PM............... Particulate Matter

ppb .............. parts per billion

PZEV .......... Partial Zero Emission Allowance Vehicle, typically, a conventional 

gasoline, diesel, or natural gas vehicle that meets the most stringent 

standards for smog-forming emissions

Rcda ............. Charge Depleting Range Actual

RD&D.......... Research, Development, and Demonstration

ROG ........... Reactive Organic Gases

RPS............. Renewable Portfolio Standard

SIP .............. State Implementation Plan

SULEV ........ Super Ultra Low Emission Vehicle

SVM ............ Small Volume Manufacturer

TAR............. Joint Agency Technical Assessment Report Release September 2010

TTW ............ Tank-To-Wheel (emissions)

Type 0 ........ Utility EV, less than 50 mile range

Type I ......... City EV, range of 50 to less than 100 miles 

Type II ........ Full Function EV, range of 100 or more miles 

Type III ....... ZEV, range of 100 or more miles plus fast refueling, or 200 miles

Type IV........ ZEV, range of 200 or more miles plus fast refueling

Type V......... ZEV, range of 300 or more miles plus fast refueling

TZEV........... Transitional Zero Emission Vehicle, typically a plug-in hybrid electric 

vehicle

UAW............ United Auto-Workers (union)

UDDS ......... Urban Dynamometer Driving Schedule

US06 ........... US06 drive schedule

U.S. DOE .... United States Department of Energy

U.S. DOT..... United States Department of Transportation

U.S. EPA..... United States Environmental Protection Agency

VAC............. Volts Alternative Current
VMT ............ Vehicle Miles Traveled

WTW ........... Well-To-Wheel (emissions)

ZEV ............ Zero Emission Vehicle
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1 INTRODUCTION

In 1990, the California Air Resources Board (ARB or the Board) adopted an ambitious 

program to dramatically reduce the environmental impact of light-duty vehicles (LDV)

through the gradual introduction of zero emission vehicles (ZEV) into the California 

fleet as part of the original Low Emission Vehicle (LEV I) program. The ZEV program, 

which affects passenger cars (PC) and light-duty trucks (LDT), has been adjusted five 

times since its inception - in 1996, 1998, 2001, 2003, and 2008, to reflect the pace of 

ZEV development and the emergence of new ZEV and ZEV-like technologies. 

Through these adjustments the fundamental goal of the program has not changed:

California remains committed to the commercialization of ZEV technologies.

California’s strong commitment to the ZEV program reflects the essential need for 

ZEV technology in order to achieve the State’s public health protection goals, 

including criteria pollutant and long-term climate change emission reductions. Healthbased state and federal air quality standards continue to be exceeded in regions 

throughout California. California’s growing population and increasing use of motor 

vehicles mean continued upward pressure on statewide emissions. 

Faced with ever more stringent regulations, vehicle manufacturers have made 

remarkable progress in advancing vehicle technology. Conventional vehicles meeting 

ARB’s most stringent emission certification standards achieve emission levels that 

seemed impossible when the ZEV program was adopted in 1990. The relative 

contribution of PCs and LDTs is expected to decline over time as new standards 

phase in, but in 2020 such vehicles will still be responsible for approximately 10 

percent of total emissions. State and federal law requires implementation of control 

strategies to attain ambient air quality standards as quickly as practicable. 

Due to California’s long history in leading the charge for ZEVs and ZEV enabling 

technologies and the state’s need for criteria pollutant and greenhouse gas (GHG)

emission reductions, it is essential that California continues to lead in launching the 

ZEV commercialization effort. California consumers have a history of adopting new 

and “green” technologies. Manufacturers have targeted California for many of their 

demonstration programs, research efforts, and early deployment due to California’s 

mild climate and “green” consumer base. For The EV Project, a project run by 

ECOtality through a grant from the United States Department of Energy (U.S. DOE), 

nearly half of the Nissan Leafs and Chevrolet Volts for the project were placed in 

California.2

 It is important that California continue as the proving grounds and 

launching point for emerging ZEV technologies. 

This rulemaking is an opportunity for the Board to further the transformation of 

California’s light duty vehicle (LDV) fleet to zero emission and low carbon. As the 

 2 ECOtality, 2011. ECOtality. “Quarterly Report: Second Quarter 2011” 

http://www.theevproject.com/downloads/documents/Q2%20EVP%20INL%20Report.pdf. 
2

technology-forcing piece of the Advanced Clean Car (ACC) package, the ZEV 

regulation along with staff proposed amendments to the Low Emission Vehicle 

(LEV III) Criteria Pollutant and LEV III GHG standards can be the catalyst for that 

transformative process. 

Public Process for ZEV Regulation Development

To support development of the ACC package, beginning in May 2010, ARB staff held 

two public workshops to engage stakeholders and obtain input on the proposed 

regulations. These stakeholders primarily included representatives from regulated 

and non-regulated manufacturers, vehicle component suppliers, and environmental 

advocates. 

These workshops were held at ARB offices in Sacramento and El Monte. The 

announcements and materials for these workshops were posted on ARB’s website 

and distributed through a list serve that included over 14500 recipients. Each 

workshop attracted over 30 attendees in person. Both meetings were either telecast, 

webcast or available by teleconference. The dates and materials presented at the 

workshops are available on ARB’s ZEV program website 

at http://www.arb.ca.gov/msprog/zevprog/zevprog.htm. 

1.1 ZEV Program Objectives (Overall Summary)

Since its adoption, the ZEV program has pushed the boundaries of ZEV development 

and emission reduction from cars and trucks, while taking into account the cost, 

performance, suitability for volume production, and long-term prospects of various 

technologies. The following are the main objectives of staff’s proposed changes: 

● Maintain requirements that facilitate and accelerate ZEV technologies 

needed to meet California’s long term GHG and criteria pollutant targets,

● Push technology to higher volume production in order to achieve cost 

reductions,

● Minor mid-course corrections and clarifications for model years 2012 

through 2017,

● Maintain compliance flexibility in meeting the ZEV requirements, and

● Simplify the structure of the ZEV program. 

In the wake of the commercial release of General Motor’s Volt PHEV and Nissan’s 

battery electric Leaf, it appears ZEVs have successfully entered the market. However, 

amending and strengthening ZEV regulatory requirements at this time will ensure 

continued technology development by multiple manufacturers. Two or three 

manufacturers succeeding in a particular vehicle technology does not guarantee 
3

achieving our air quality or 2050 GHG goals. The key is moving beyond the early 

adopters and providing viable choices for the everyday consumer. 

The most significant amendment in staff’s proposal is the increased ZEV volume 

requirement for 2018 and subsequent model years. Staff’s 2009 analysis showed that 

almost every LDV sold by model year 2040 would need to be a ZEV in order to meet 

California’s long term GHG goals. More recent analyses by various organizations 

continue to confirm this trend: the need for large-scale electrification of the LDV 

fleet.3,4,5

 Staff’s proposal helps to get California’s fleet on an appropriate trajectory 

toward meeting this long term GHG goal, while offering compliance flexibility and not 

placing unnecessary and burdensome requirements on those manufacturers clearly 

on their way to commercializing ZEV technology. 

Staff’s proposed amendments also help simplify the regulation in model years 2018 

and beyond. ZEV credits are now linear, based only on the vehicle’s range. Also, the 

PHEV6 credit calculation has been simplified, allowing manufacturers to do one 

calculation, as opposed to the old method of adding up various allowances. Another 

change affecting many manufacturers in both the LEV III proposal and the ZEV 

regulation proposal is a new manufacturer size definition. This change will bring 

nearly all manufacturers under the full ZEV requirements by model year 2018. This 

amendment is important for commercialization of 2050 vehicle technologies, ensuring 

a portfolio of vehicle models and technologies become available. 

1.2 Air Quality and Climate Change in California

There are currently roughly 25 million cars operating in California, and by 2035, will 

grow to more than 30 million cars. Prior to the establishment of ARB in 1968,

photochemical smog pollution was a major health concern that caused acute health 

impacts to Californians. Much of this smog was formed by automobile 

emissions. Over the next 40 years, ARB adopted the most stringent automobile 

emissions standards in the world, requiring use of the catalytic converter that 

revolutionized emissions control and dramatically reduced emissions from 

automobiles. Those regulations, in conjunction with regional programs to reduce 

emissions from refineries, power-plants, and other stationary sources, led to a major 

improvement in air quality. In 1980, the South Coast Air Basin experienced 

widespread ozone levels which exceeded air quality standard for 179 days per 

year7

. In 2010, that number was reduced to 63 days per year, and those violations 

occurred in a much smaller portion of the Air Basin. During this same period, peak 

ozone concentrations in Southern California dropped more than 60 percent - from 273 

 3 CCST, 2011. California Council on Science and Technology, May 2011. “California’s Energy Future: The View to 

2050.”

4 NREL, 2011a. National Renewable Energy Laboratory. February 15, 2011 “Role of Fuel Carbon Intensity in 

Achieving 2050 GHG Reduction Goals within the LDV Sector.” 5 IEA, 2011. International Energy Agency. June 2011. “Technology Roadmap: Electric and Plug-in Hybrid Electric 

Vehicles.”

6 Plug-in hybrid electric vehicles (PHEV) are also referred to as Transitional Zero Emission Vehicles, or TZEVs. 

Staff is proposing new terminology to be straighter forward and simple. 7 1997 federal 8-hour ozone standard of 0.08 ppm.
4

parts per billion (ppb) to 112 ppb. Similar air quality improvements were seen in many 

other regions of California.

Despite these major improvements, air quality in both the greater Los Angeles region 

and the San Joaquin Valley are classified by the United States Environmental 

Protection Agency (U.S. EPA) as “extreme” ozone non-attainment areas. This is the 

most severe federal non-attainment classification, and these two areas of California 

are the only two areas in the nation granted this designation. Bringing these regions 

into attainment requires more significant emission controls than anywhere else in the 

United States.

In 2007, California adopted State Implementation Plans (SIP) to chart the course to 

attainment of the 1997 federal 8-hour ozone standard. To achieve the 1997 ozone 

standard by the attainment date in 2023, oxides of nitrogen (NOx) emissions in the 

greater Los Angeles region must be reduced by two thirds, even after considering all 

of the regulations in place today, with the most significant share of needed emission 

reductions coming from long-term advanced clean air technologies. In the San 

Joaquin Valley, the SIP identified the need to reduce NOx emissions by 80 tons/day in 

2023 through the use of long-term and advanced technology strategies. To put this in 

context, this is equivalent to eliminating the NOx emissions from all on-road vehicles 

operating in these regions.

Despite the dramatic emission reductions and air quality improvements achieved to 

date, most urban areas of California, including Southern California, and the Central 

Valley continue to exceed the federal ozone standard8

. ARB, the South Coast Air 

Quality Management District, and the San Joaquin Valley Air Pollution Control District 

are beginning to evaluate the emission reductions needed to attain the more healthprotective ozone standard U.S. EPA established in 2008. In order to meet these 

challenges, air quality and land-use agencies in the South Coast and San Joaquin 

Valley are actively pursuing a coordinated strategy that would result in the widespread 

use of zero-emission technologies on transportation networks designed to reduce 

smog-forming emissions from single-occupant vehicle use.

Climate change poses a serious threat to the economic well-being, public health, 

natural resources, and environment of California. Global warming is projected to have 

detrimental effects on some of California’s largest industries (including agriculture and 

tourism), increase the strain on electricity supplies, and contribute to unhealthy 

air.9,10,11 

 8 2008 federal 8-hour ozone standard of 0.075 ppm. Designations, classifications, attainment date and planning 

requirements for the 2008 federal ozone standard have not yet been established by the U.S. Environmental 

Protection Agency. ARB anticipates that SIPs will be due to U.S. EPA by 2015 with attainment required in the 

2031/32 timeframe.

9 CNRA, 2009. California Natural Resources Agency. 2009. “2009 California Climate Adaptation Strategy”

http://www.energy.ca.gov/2011publications/CEC-600-2011-007/CEC-600-2011-007-SD.pdf 10 UC Berkeley, 2008. University of California, Berkeley. November 2008. “California Climate Risk and Response” 11 ARB 2009a. California Air Resources Board. May 11, 2009 Update. “Climate Change Scoping Plan” 

http://www.arb.ca.gov/cc/scopingplan/document/adopted_scoping_plan.pdf
5

A number of state policies directly address climate change emissions. Assembly Bill 

(AB) 32 (2006) requires that statewide climate change emissions be reduced to 1990 

levels by 2020. AB 1007 (2005) indicates a need for electric drive trains as well as 

other significant actions to meet California’s goals. Fleet performance standards 

outlined by AB 1493 (2002) and the LEV III program provide a foundation for these 

emission reductions, however, performance standards alone cannot provide 

reasonable assurance that ZEVs will be produced in necessary volumes to provide a 

sufficient launch of the technology in the marketplace. The ZEV regulation is the 

necessary tool to ensure a portfolio of advanced technologies are available to 

consumers. 

In recognizing the potential for large, damaging impacts from climate change, former 

California Governor Arnold Schwarzenegger enacted Executive Order S-03-05, 

requiring a reduction in state-wide GHG emissions to 80-percent below 1990 levels by 

2050. Staff’s 2009 analysis12 showed widespread adoption of conventional 

technologies, even conventional mild hybrid electric vehicles (HEV), will not be 

enough to meet these stringent targets. ZEVs will need to reach nearly 100 percent of 

new vehicle sales between 2040 and 2050, with commercial markets for ZEVs 

launching in the 2015 to 2020 timeframe. All ZEV technologies – fuel cell electric 

vehicle (FCV), battery electric vehicle (BEV), and plug-in hybrid electric vehicle 

(PHEV) – need to be encouraged and promoted through regulatory and nonregulatory methods. 

1.3 ZEV Program History 

Manufacturers originally pursued the development of BEVs to meet the ZEV 

requirements. In 1996, ARB eliminated the requirements for the 1998 through 2002 

model years due to cost and performance issues, to allow additional time for battery 

research and development. ARB entered into memorandums of agreement (MOA)

with vehicle manufacturers to place, in California, roughly 1,800 advanced-BEVs 

between 1998 and 2000. The agreements were designed to provide battery 

developers with the necessary initial production volumes to meet the cost and 

performance goals needed for begin early commercial production. 

Contrary to expectations, advanced battery costs remained too high for commercial 

viability. Notwithstanding these costs, several manufacturers continued to place a 

modest number of BEVs beyond the MOA volumes. These vehicles earned ZEV 

credits that have been used for compliance with the regulation. 

Manufacturers began to look seriously at hydrogen FCVs in the late 1990’s as an 

alternative to BEVs. This interest led to cooperative efforts among ARB, industry and 

other governmental agencies to create the California Fuel Cell Partnership in 1999. 

 12 ARB, 2009b. California Air Resources Board. November 25, 2009. “White Paper: Summary of Staff’s 

Preliminary Assessment of the Need for Revisions to the Zero Emission Vehicle Regulation - Attachment B: 2050 

Greenhouse Gas Analysis” http://www.arb.ca.gov/msprog/zevprog/2009zevreview/attachment_b_2050ghg.pdf
6

The Partnership demonstrates vehicle technology while exploring the paths to 

commercialization, including the development of public hydrogen fueling infrastructure. 

Changes to the ZEV regulation in 2003 provided new incentives for FCVs, resolved 

legal challenges, and addressed the state of technology at that time. 

1.4 2008 Amendments and 2009 Technology Review

The Board adopted Resolution 08-24 at the March 2008 hearing, directing staff to 

redesign the 2015 and beyond requirements for the ZEV program, strengthen the 

requirement more than the current program, focus primarily on the zero emission 

drive, that is BEV, FCV, and PHEV technologies, and ensure California as the central 

location for advanced, low GHG technology vehicles from the demonstration phase to 

commercialization. 

In 2009, staff undertook an assessment of ZEV technologies, an analysis of pathways 

to meeting California’s long term 2050 GHG reduction goals in the LDV subsector13

and a review of current and possible future complementary policies that would be 

needed to aid in infrastructure development and market pull policies for ZEVs. Based 

on the U.S. DOE Vision model14, staff developed a California-specific model for the 

LDV subsector, relying heavily on model inputs and assumptions from peer-reviewed 

studies. Figure 1 shows what the cumulative on-road PCs would need to be to reach 

the 2050 goal. 

Figure 1: On Road Passenger Car Scenario to Reach 2050 Goal

 13 This analysis assumed a 2050 target of 80% below the passenger vehicle portion of 1990’s GHG inventory, or

20% of 108.5 MMT of CO2 equivalent emissions. 14 DOE, 2008. United States Department of Energy. Vision Model, 2008. 

http://www.transportation.anl.gov/modeling_simulation/VISION/
7

This graph shows the cumulative on-road PC mix for the scenario developed by staff 

that reaches the Governor’s GHG emission reduction goal. The most important trend 

to highlight is that ZEVs grow to become approximately 87 percent of on-road PCs 

after ZEV sales reached nearly 100 percent in 2040. 

Through modeling various scenarios, including the scenario shown in Figure 1, staff 

concluded:

● ZEVs are essential to meeting California’s long term GHG emission 

reduction goals. 

● A high-volume (100,000s) ZEV market needs to exist by 2020 in order for 

ZEV sales and fleet turn-over rates to result in enough ZEVs to achieve 

deep reductions in GHG emissions. 

● Any amendments to the ZEV regulation should help keep the LDV 

subsector on track to reach an 80 percent reduction in GHG emissions by 

2050. 

● FCVs, BEVs, and PHEVs with low carbon biofuels are the three most 

viable candidates for near-zero carbon transportation. All three vehicle 

technologies will be necessary in order to achieve the GHG goal, and to 

lessen the risk of market failures.

Staff presented its findings at the December 2009 Board Hearing. At the December 

hearing, the Board adopted Resolution 09-6615, reaffirming its direction to meet 

California’s long term air quality and climate change reduction goals through 

commercialization of low-carbon emitting vehicle technologies. The Board directed 

staff to consider the following in preparing amendments to the ZEV regulation:

• Shift focus from only criteria pollutant emission regulations to GHG 

emission reductions and criteria pollutants;

• Focus on transforming California’s light-duty fleet and commercializing lowcarbon emitting technologies, such as ZEVs and PHEV in a timeframe 

sufficient to meet the 2050 target of 80 percent reduction in GHG 

emissions compared to 1990 levels;

• Take into consideration new LEV III GHG fleet standards and revise the 

ZEV regulatory structure, credit values, and stringency of the current 

requirements accordingly.

In 2010, President Barack Obama directed the U.S. EPA and National Highway Traffic 

Safety Administration (NHTSA) to work with California to develop GHG fleet standards 

 15 ARB 2009c. California Air Resources Board. Resolution 09-66. December 9, 2009. 

http://www.arb.ca.gov/msprog/zevprog/2009zevreview/res09_66.pdf
8

for model year 2017 through 2025 LDVs. The Joint Technical Assessment Report 

(TAR) was released in September 2010. The report concluded “electric drive vehicles 

including hybrid(s)...battery electric vehicles...plug-in hybrid(s)...and hydrogen fuel 

cell vehicles...can dramatically reduce petroleum consumption and GHG emissions 

compared to conventional technologies...The future rate of penetration of these 

technologies into the vehicle fleet is not only related to future GHG and CAFE 

standards, but also to future reductions in HEV/PHEV/EV [electric vehicle] battery 

costs, the overall performance and consumer demand for the advanced 

technologies...”16 Manufacturers confirmed in meetings leading up to the release of 

the TAR, their commitment to develop ZEV technologies. “...[A] number of the firms 

suggested that in the 2020 timeframe their U.S. sales of HEVs, PHEVs, and EVs

[electric vehicle] combined could be on the order of 15-20% of their production.”(EPA, 

2010, pp.2-5)

1.5 The Current Program

Table 1.1 below specifies large volume manufacturer credit obligations for 2012 

through 2014 and 2015 through 2017model years.

 16 EPA, 2010. United States Environmental Protection Agency, National Highway Safety and Traffic Administration 

and California Air Resources Board. September 2010. “Interim Joint Technical Assessment Report: Light-Duty 

Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 

2017-2025” (p. vii)
9

Table 1.1: Summary of 2012 Through 2017 Model Year Requirements

For Large Volume Manufacturers*

Vehicle 

Category

Vehicle Technology 

Descriptions

2012-2014

Annual Credit 

Requirement

2012-2014

Annual

% of Fleet

2015-2017

Annual Credit 

Requirement

2015-2017 

% of Fleet

ZEV

Zero tailpipe emissions: 

battery electric vehicles, 

and hydrogen fuel cells.

0.79% 0.2% 3% 0.7%

TZEV

Transitional Zero Emission 

Vehicles; Vehicles certified 

to PZEV standards that 

utilize a ZEV fuel: e.g. 

plug-in hybrid electric 

vehicles or hydrogen 

internal combustion engine 

vehicles. Proposed 

terminology replacing 

“Enhanced AT PZEV”

2.21% 1.5% 3% 2%

AT PZEV

Vehicles certified to PZEV 

standards and employing 

ZEV-enabling 

technologies: e.g. hybrids 

or compressed natural gas 

vehicles.

3% 7% 2% 6%

PZEV

Conventional vehicles 

certified to the most 

stringent tailpipe emission 

standards, zero 

evaporative emissions, 

and extended warranty.

6% 30% 6% 30%

*The ZEV regulation establishes a credit requirement, shown in shaded columns , for manufacturers 

each year. Manufacturers earn credits through production of vehicles from different categories. The 

“Annual % of Fleet” represents the percentage of new vehicle sales expected from each vehicle 

category due to compliance with the regulations.

The four categories of vehicles used to meet the ZEV regulation are ZEVs, TZEVs 

(formerly “Enhanced advanced technology partial zero emission allowance vehicles” 

or “Enhanced AT PZEV”), advanced technology partial zero emission allowance

vehicles (AT PZEV), and partial zero emission allowance vehicles (PZEV). To date all 

manufacturers are fully in compliance, with nearly 5,600 ZEVs demonstrated, and over

1,700,000 PZEVs and 350,000 AT PZEVs commercially introduced, resulting in 

significant emissions reductions. Examples of PZEVs are the Honda Civic and Mazda 

6 while an example of an AT PZEV is the Ford Fusion Hybrid. Table 1.2, below, 

shows the cumulative number of vehicles placed in compliance with the ZEV 

regulation.
10

Table 1.2: Cumulative Vehicle Placement

ZEV Credit Category Technology Type Quantity of 

Vehicles

ZEV Fuel Cell 350

Battery Electric 5,200

Neighborhood Electric 28,800

AT PZEV Hybrid or Compressed Natural 

Gas

380,000

PZEV Conventional Gas 1,750,000

*On-road number is less for FCVs and NEVs.

Manufacturer Compliance Status and Near Term Production Plans

All manufacturers have complied with ZEV regulation requirements. For the 2012 

model year, six large volume manufacturers (LVM) are required to comply with the 

entire regulation, meaning these manufacturers must produce pure ZEVs: Chrysler, 

Ford Motor Company, General Motors, Honda, Nissan, and Toyota. Ten intermediate 

volume manufacturers (IVM) have the option to meet their entire requirement with 

credits from PZEV. These ten manufacturers include: BMW, Hyundai, Jaguar-Land 

Rover, Kia, Mazda, Mercedes Benz, Subaru, Volkswagen and Volvo. Several other 

non-regulated manufacturers are actively producing ZEVs and neighborhood electric 

vehicles (NEV), and earning ZEV credits.

The 2008 amendments provided greater flexibility in the regulation for model years 

2012 and beyond, offering more equal treatment of ZEV technologies. Manufacturers 

have complied by producing the maximum number of PZEVs and AT PZEVs. Half of 

the LVMs have heavily pursued FCV technology, while the other half have focused

predominately on BEV technology. 

Fuel Cell Vehicle Technology, Deployment, and Infrastructure Status

Manufacturers have continued to pursue FCV technology, publically committing to 

early-commercialization in the 2015 to 2020 timeframe. In a joint letter issued in 

September 2009, manufacturers (Daimler, Ford, General Motors, Honda, Hyundai, 

Kia, Toyota, alliance Renault SA, and Nissan) strongly supported fuel cell technology, 

anticipating that from 2015 onwards, FCVs could reach commercialization. Recently, 

Mercedes Benz announced a three year lease program for its 2011 B-Class F-Cell 

vehicle.17

In January 2011, thirteen Japanese companies jointly announced significant cost 

reductions in manufacturing FCVs, commitment to 100 hydrogen stations in Japan by 

2015, and joint support for spreading FCV technology throughout Japan.18 Such 

 17 Autobloggreen, 2010. AutoBlogGreen.com. Eric Loveday. “Mercedes-Benz prices B-Class F-Cell lease at $849 

a month”

http://www.green.autoblog.com/2010/11/22/mercedes-benz-prices-b-class-f-cell-lease-at-849-a-month/ 18 Toyota, 2011. Toyota Motor Company. January 13, 2011 “Japanese Companies Eye Smooth Domestic Launch 

of FCVs” http://www2.toyota.co.jp/en/news/11/01/0113.html
11

worldwide developments help to bring vehicle costs down, advancing FCVs closer 

towards commercialization.

Hydrogen infrastructure technology is advancing and station performance is 

improving. As a result, customer experience is progressing toward being comparable 

to today’s gasoline fueling experience. Through ARB and California Energy 

Commission (CEC) funding, five new stations are currently under construction or will 

have opened by the end of the year. Also, an existing station has been updated and 

put back into service with improvements in accessibility. Additionally, eight new 

hydrogen stations will be opening in the next two years, with three more stations 

planned to be upgraded with increased capacity and accessibility. In total, over 2000 

additional kilograms per day of hydrogen will have been made available to FCVs 

located in the California’s Bay Area and South Coast air quality management districts. 

The increased capacity will support up to 2500 FCVs total. Confidential submittals 

auto manufacturers reveal that over 50,000 FCVs are planned to be in operation in 

California by 2017.

Recently, a number of manufacturers have announced aggressive production plans 

for PHEVs and BEVs for the next three model years. These announcements reflect 

technological advancement in lithium ion battery technology and a general shift in 

customer demand and corporate environmental stewardship. The following table 

provides a summary of manufacturers’ current program commitments, by technology 

category, as publicly stated. 
12

Table 1.3: Manufacturer ZEV and TZEV Announcements

Manufacturer Model Type Timeframe Reference

BMW 

ActiveE BEV 2011 BMW, 2011a

i3 BEV

2013

BMW, 2011b

i3 Rex PHEV BMW, 2011c

i8 PHEV 2014 BMW, 2011b

BYD e6 BEV 2012 BYD, 2010

CODA (unknown) BEV 2011 PopularMechanics, 2011

Chrysler Fiat 500 EV BEV 2012 Chrysler, 2010

Fisker Karma PHEV 2011 Fisker, 2011

Ford

C-MAX 

Energi PHEV 2012 Ford, 2011a

Focus 

Electric BEV 2011 Ford, 2011b

Transit 

Connect 

Electric

BEV in production n/a

GM

Cadillac ELR PHEV (unknown) GM, 2011a

Spark BEV 2012 GM, 2011b

Volt PHEV in production n/a

(unknown) FCV 2015 USA TODAY, 2010

Honda

Fit EV BEV 2012

Honda, 2011

(unknown) PHEV 2012

Clarity FCX FCV in production n/a

Hyundai Tucson IX FCV 2015 Bloomberg, 2010

Mercedes Benz (unknown) BEV 2012 Mercedes, 2011

F-Cell FCV in production Autobloggreen, 2010

Mitsubishi

i BEV in production n/a

Outlander PHEV 2013 Motor Trend, 2011

Nissan LEAF BEV in production n/a

Smart fortwo ED BEV in production n/a

Tesla Model S BEV 2012 Tesla, 2011

Think City BEV in production n/a

Toyota

Prius Plug-In PHEV 2012 Toyota, 2011b

RAV-4 EV BEV 2012 Toyota, 2011c Scion iQ-EV BEV 2012

(unknown) FCV 2015 Toyota, 2011d

Volkswagen e-up! BEV 2013 Volkswagen, 2011

Wheego Whip LiFe BEV in production n/a

The table reveals that nearly every manufacturer will be introducing production BEV 

and PHEV products within the next one to three years, and five manufacturers will 

commercially introduce FCVs by 2015. 
13

2 SUMMARY OF PROPOSED AMENDMENTS

In response to the Board’s direction in 2008 and in 2009, and in consideration of the 

issues related to technology commercialization and new proposed GHG and criteria 

pollutant standards, staff proposes amendments to the program that strengthen and 

simplify the regulation. The amendments are spilt into two parts: Model year 2012 

through 2017 (Part I), and model years 2018 and beyond (Part II). The amendments 

identified in this section represent the most significant changes being proposed in each 

“Part.” Additional minor proposed amendments and concurrent rationale can be found

below in Section 9.

The following sections more fully describe each of the major proposed amendments and 

the rationale for the proposed change. 

2.1 Part I: Model Year 2012 through 2017 Amendments

2.1.1 Type I.5x and Type IIx: Range Extended Battery Electric Vehicles

Some manufacturers have proposed a new class of advanced vehicles for separate 

treatment as part of the ZEV program: range extended battery electric vehicle

(referred to as a “Type I.5x and Type IIx vehicles” or “BEVx” in this proposal). The 

proposed vehicle is closer to a BEV than to a PHEV: a vehicle with primarily zeroemission operation equipped with a small non-ZEV fuel auxiliary power unit (APU) for 

limited range extension. Manufacturers proposing this type of vehicle describe it as 

having reduced performance while operating in APU mode that allows drivers to find a 

charging location, and discouraging non-zero emission driving. Most of these vehicles 

are expected to have a zero-emission range of 80 miles or greater. This vehicle has

substantially more range than currently announced PHEVs, with electric range 

comparable to full function BEVs and will probably require ground-up BEV design. 

Manufacturers believe that the APU will be a relatively high-cost option on top of an 

existing, full function (100+ mile), BEV. 

BEVs are expected to play an important role in ARB’s long-term emissions reduction 

strategy, but the market for current technology BEVs might be limited. The proposed 

vehicle has the potential to expand the BEV market beyond current market estimates 

by giving interested BEV customers an extra measure of confidence about range, and 

if successful, would add substantial zero-emission vehicle miles traveled (VMT) to the 

overall California fleet. While the APU within the vehicle may evolve during this 

transition, from gasoline to advanced biofuels to hydrogen, it is reasonable to believe 

that this proposed vehicle may help meet ARB’s long-term GHG and criteria pollutant 

emissions reduction goals. 

Staff expects BEVxs to play a longer-term role than TZEVs because of their improved 

zero emission mileage potential. These vehicles would be particularly well suited to 

use of low upstream GHG fuels that might be more expensive, since the predominant 

operating cost would be offset by relatively low-cost electricity. In addition to potential 

for emerging alternative fuel use, there is an opportunity to explore engine 
14

technologies that are advantageous but otherwise unsuitable for application in 

conventional vehicles. Engine technology applied to existing PHEVs is derived from 

small conventional production gasoline engines, but highly specialized APUs for 

BEVxs may eventually spin off and evolve in completely different directions. Future 

BEVxs with highly specialized engine and fuel technologies could be optimized to 

drive cost, weight, size, and emissions down and make these specialized BEVx APUs 

suitable for more affordable and therefore more widespread application. Lotus 

Engineering and other automotive design firms have been developing hybrid-specific 

APUs and have several unique concepts under development already.19

There are several reasons to consider equivalent regulatory treatment for BEVxs 

relative to BEVs with the same range capability. Most BEV drivers must plan their 

vehicle use with some degree of “reserve” range left in the battery, while BEVx drivers 

will have the confidence plan trips that consume all, or nearly all, of the energy storage 

capability of their battery systems. In this way, the BEVx market may appeal to drivers 

who would not otherwise consider a BEV with the same range. Also, since staff 

considers these vehicles full function BEVs with short range APUs, it is important that 

the minimum range for eligibility be equivalent to full function BEVs in the marketplace. 

Staff proposes the following criteria to these proposed vehicles: 

(1) the APU range is equal to or less than the all-electric range, 

(2) engine operation cannot occur until the battery charge has been depleted to 

the charge-sustaining lower limit, 

(3) have a minimum 80 miles electric range, and 

(4) super ultra low emission vehicle (SULEV) and zero evaporative emissions 

compliant and TZEV warranty requirements on the battery system. 

Though not required, manufacturers are expected to incorporate further performance 

limits on charge sustaining APU mode operation, including speed restrictions. The 

intent of the backup APU is not to charge the battery, but rather, to enable the vehicle 

to drive to a charging station. BEVxs will fit the needs of drivers who are looking for 

an improved regional driving capability, but not for use in long-distance driving. 

Because of the potential for strong zero emissions mileage performance potential, 

staff proposes to treat this emerging class of BEVxs similar to BEVs, similar to current 

treatment of NEVs. For the 2012 through 2017 model years, BEVxs will be referred to 

as Type I.5x and Type IIx vehicles, to fit in with the pre-2018 nomenclature for ZEVs. 

Staff proposes Type I.5x and Type IIx vehicles will receive the same credits as Type 

I.5 and Type II ZEVs: 2.5 and 3 credits, respectively. Staff proposes that a 

manufacturer may meet up to 50 percent of the portion of their requirement that must 

be met with pure ZEVs with these Type I.5x and Type IIx vehicles. Additionally, staff 

proposes that these vehicles will qualify under the Travel Provision, through 2017, like 

their ZEV counterparts. Lastly, Type I.5x and Type IIx vehicles will be eligible for 

 19 Lotus, 2010. Lotus Engineering. Turner, James, et al,. “The Lotus Range Extender Engine.” SAE Int J Engines 

3:318-351.
15

advanced demonstration credit through 2017 model year. See Section 2.2.6, below, 

for 2018 and subsequent model year treatment. 

It is staff’s intent to provide equivalent incentives for BEVxs, and to encourage outside 

stakeholders distributing or controlling incentives normally allocated to ZEVs to also 

allocate equivalent benefits to vehicles meeting the new BEVx requirements. 

2.1.2 Extend Compliance Flexibility Provisions Through Model Year 2017

Advanced Demonstrations

Currently, up to 2520 ZEVs or TZEVs21 that are placed in a California advanced 

technology demonstration program may earn ZEV credits even if they are not “delivered 

for sale.” Instead of being sold or leased, these demonstration vehicles are typically 

operated by the manufacturer to gain needed experience and information about the 

technology. In addition, vehicles in these programs are required to be in California for 

at least one year of a two year placement. The current regulation sunsets advanced 

demonstration credits after model year 2014. 

Even though some manufacturers have seemingly commercialized ZEVs, many 

manufacturers are still in the research and development phase for zero emission 

technologies. Staff is proposing to extend advanced demonstrations for ZEVs, but not 

TZEVs, through model year 2017, allowing advanced demonstrations credits for TZEVs 

to sunset after model year 2014 as currently written. With staff’s proposal to amend the 

definition for LVMs which causes additional manufacturers to come under the full ZEV 

requirements in model year 2018, extension of this provision will allow prospective 2018 

LVMs to demonstrate technologies needed to meet future requirements, while lessening 

the burden of placing the vehicles in service. 

Travel Provision

Section 177 of the federal Clean Air Act22 allows other states to adopt California motor 

vehicle emission standards including the ZEV regulation. Currently, there are 11 states 

which have adopted the California ZEV regulation: Arizona, Connecticut, Maine, 

Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, 

and Vermont (hereafter, referred to as section 177 ZEV states). The current ZEV 

regulation allows all ZEV “types”, except TZEVs, placed in service in Section 177 ZEV 

states to be counted towards compliance with the California percentage ZEV 

requirements as if they are placed in service in California. Similarly, a vehicle placed in 

California counts towards compliance in a Section 177 ZEV state. The effect of travel is 

the number of ZEVs required to be produced by vehicle manufacturers, regardless of 

how many states adopt the ZEV program, will not exceed those required by ARB’s 

regulation alone. Typically the number of vehicles that have to be produced for the 

 20 California Code of Regulation (CCR), title 13, section 1962.1(g)(4) language states 25 vehicles per model, per 

ZEV state, per year.

21 CCR, title 13, section 1962.1(g)(4) language currently states Enhanced AT PZEVs are eligible. Staff is 

proposing to replace Enhanced AT PZEVs with Transitional Zero Emission Vehicles or TZEVs.

22 United States Code, title 42, section 7507
16

Section 177 ZEV states is 1.5 to 2 times the number that has to be produced for 

California (two times is used in this document for simplicity).

There is currently no travel provision for TZEVs, and staff is not proposing to change 

this provision. This means that manufacturers that choose to comply in California 

using TZEVs may not use those credits for compliance in the Section 177 ZEV states. 

Currently the Travel Provision sunsets after model year 2014 for Type I, Type I.5, and 

Type II ZEVs, which are typically BEVs. Staff proposes to extend this provision 

through model year 2017 for these three ZEV types. California markets have matured 

and are well prepared for increased sales requirements. However, markets in Section 

177 ZEV states need additional time to prepare for ZEVs, and some vehicle 

manufacturers need time to expand their BEV offerings to other states and to different 

climates.

Staff is also proposing clarifying language within this provision to ensure only 

manufacturers with a requirement are allowed to use this provision. This is the current 

intent of the language in this provision, and the proposed language is only for 

clarification. 

2.1.3 Increase Incentives for Fuel Cell Vehicles: Model Years 2015 – 2017

Under the current regulation, travel for BEVs expires after 2014 model year, but FCVs 

travel through model year 2017. Thus the production of a BEV to meet California’s 

regulation means an additional obligation to produce approximately two more BEVs to 

comply with the combined requirement of the section 177 ZEV states. If a FCV is 

produced for compliance in California, there is no further production obligation in the 

Section 177 ZEV states because the travel provision applies to FCVs.

Due to staff’s proposed extension of the travel provision for BEVs for model years 

2015 through 2017 described above, production of a BEV satisfies the obligation of 

both Section 177 ZEV states and California, whereas the current regulation would 

result in a requirement to produce three BEVs, compared to one FCV. As a result 

there will be a substantially reduced incentive to produce FCVs in this timeframe. 

California is investing heavily to create a publically accessible hydrogen fueling 

infrastructure which is a necessary prerequisite to manufacturers introducing to the 

market FCVs. Staff’s 2009 fleet-wide GHG analysis showed FCV technology would 

be the predominate on-road ZEV technology in model year 2050. In development of 

the 2009 analysis, as well as this rulemaking, many manufacturers stated BEV

technology would only be able to fulfill 20 to 30 percent of future fleet sales.23 Thus 

decreasing the relative credit derived from producing a FCV, compared to a BEV, 

 23 ARB, 2009d. California Air Resources Board. “White Paper: Summary of Staff’s Preliminary Assessment of the 

Need for Revisions to the Zero Emission Vehicle Regulation,” 

http://www.arb.ca.gov/msprog/zevprog/2009zevreview/
17

sends the wrong signal to those five manufacturers planning the introduction of FCVs 

prior to 2017.

Staff proposes to address this issue by increasing the amount of credit earned by 

Type V ZEVs, or 300 mile range fast-refueling capable FCVs. Currently, Type V ZEVs 

earn seven credits each. Staff proposes to increase the credit value to nine credits. 

This would be three times the amount a Type II ZEV (a 100 mile BEV) would earn in 

this time frame. Proponents of this change have requested significantly greater credit. 

However, staff believes the proposed credit level appropriately recognizes and 

provides an incentive for the technology without greatly reducing the number of 

vehicles produced in this timeframe for compliance. It also better reflects the current 

higher cost of producing a FCV, compared to a BEV, at the current state of FCV 

development and lower production quantities. 

2.1.4 Decrease Overall Requirement for IVMs for Model Years 2015 – 2017 

IVMs currently are allowed to comply fully with credits from PZEVs to meet their ZEV 

obligation. Table 2.1 below shows an IVM’s credit requirement, and what this means 

in terms of a percentage of its annual vehicle sales being PZEVs.

Table 2.1: Current IVM Requirement 2012 through 2017

Model Years Current Credit 

Percentage

Requirement

Percentage of 

IVM Fleet 

2012 through 2014 12% ~60%

2015 through 2017 14% ~80%

Due to staff proposed amendments to manufacturer size definitions, many current 

IVMs will become LVMs by model year 2018. Staff is not proposing any additional 

lead time for these manufacturers, and considers the next six model years (up to 

model year 2018) adequate for ZEV development, considering many of the 

manufacturers have development programs underway. 

For these reasons, staff proposes to reduce the credit percentage for IVMs for model 

years 2015 through 2017, from 14 percent to 12 percent. This still guarantees 60

percent of each IVM’s fleet will be PZEVs, a substantially higher percentage of the 

manufacturers’ fleets than LVM fleets. The change will allow IVMs, especially those 

becoming LVMs in 2018, to focus on development of ZEV technologies necessary for 

meeting more stringent ZEV requirements in 2018.

2.1.5 Remove Carry Forward Provisions

Historically, the ZEV regulation allowed the banking and trading of credits earned from 

early introduction or over-compliance with the regulation. In 2008, staff modified the 

way banked ZEV credits could be used to meet future requirements. ZEV credits 

could be used to meet ZEV obligations for the model year in which they were earned

and two additional model years. For example, if a manufacturer earns three ZEV 
18

credits from placing a Type II ZEV24 in model year 2010, the manufacturer may bank 

and use those credits to meet the portion of the regulation that must be met with ZEVs 

for model years 2011 and 2012 compliance. In 2013, the credits may only satisfy the 

portion of the requirement that may be met with TZEVs.

Staff proposes to remove this provision, and allow ZEV credits to be banked and used 

to meet the full requirement in all future model years. The decision to remove this 

provision is justified based on the substantial increase in ZEV volume proposed for 

model years 2018 and beyond, and the incentive it provides to produce ZEVs prior to 

2018. Currently requirements plateau for three years at a time but hold steady 

indefinitely at a relatively low level for 2018 through 2025 model years. Because staff 

is proposing to increase volumetric requirements each year for model years 2018 

through 2025, it is unlikely that manufacturers will be able to bank large volumes of 

credits for later use. Also, some manufacturers will likely need banked credits to 

assist with compliance in later years. Lastly, this proposed amendment simplifies the 

regulation in 2018 and subsequent model years. 

2.1.6 Minor Amendments

Amend PZEV Calculations 

Staff is proposing several minor amendments to the PZEV calculations. First, ARB 

received several comments regarding the zero-emission VMT PZEV allowance, many 

of which were received during 2009 rulemaking for PHEV test procedure amendments 

and aftermarket parts certification requirements.25 The issues concerned the equation 

for greater than 40 mile PHEVs, in section 1962.1(c)(3)(A), and potential future 

PHEVs with blended operation. Staff is proposing to correct inconsistencies in the 

zero-emission VMT allowance equation as indicated in Table 2.2 below. 

 24 An example of a Type II ZEV is a 100 mile BEV. 25 Rulemaking documents and public comments received during the 45-day and subsequent comment periods for 

the PHEV test procedure rulemaking can be accessed at the following link: 

http://www.arb.ca.gov/regact/2008/phev09/phev09.htm
19

Table 2.2: Proposed Regulatory Language – Zero Emission VMT Allowance

2.1.6.1 Range Zero-emission VMT Allowance

EAERu < 10 miles 0.0

EAERu ≥10 miles to 40 

miles

and

Rcda ≥ 10 miles to 40 miles

EAERu x (1 – UFRcda)/11.028

Rcda EAERu > 40 miles

EAERu40/ 29.63 

(EAERu40) x [1 – (UF40*Rcda/EAERu)]/

11.028

Where,

UF40= utility factor at 40 miles

EAERu40= 40 miles

*EAER means equivalent all electric range.

*Rcda means charge depleting range actual.

Second, staff is providing clarifying language as to the utility factors (UF) to be used in 

determining a manufacturer’s zero emission VMT allowance. Within the update 

Society of Automotive Engineers J2841 (March 2009), there are multiple UFs. Staff 

proposes to specify the UF determined to be according to Section 4.5.2 Equation 5 

and the “Fleet UF” Utility Factor Equation Coefficients in Section 4.5.2, Table 3, in 

J2841 (March 2009). 

Third, staff is proposing to delete the alternative test procedures for determining a 

manufacturer’s zero emission VMT allowance. The alternative test procedures 

allowed manufacturers to receive zero emission VMT allowance for vehicles using 

fuels that produce near-zero, but not zero criteria pollutants. Staff is proposing this 

amendment because no automakers have included vehicles requiring or requesting 

such exemptions in any vehicle planned through 2017. This change would most likely 

impact a manufacturer planning to certify and sell hydrogen internal combustion 

engine (HICE) vehicles in the near-term, but staff believes that HICE vehicles are not 

under consideration for sales until the 2020 and beyond timeframe when hydrogen 

fueling infrastructure may be more commonly available in California.

Also, staff is proposing to eliminate the Type C advanced componentry allowance. In 

past years, manufacturers produced conventional hybrids with lower system voltages, 

and there was still some degree of motor system technology transferrable to 

ZEVs. Since that time, ZEV technology has advanced and staff now believes that the 

minimum qualifying system should be increased to the higher voltage Type D because 

(1) AT PZEVs need to make use of systems that more closely represent those that are 

needed for ZEVs, and (2) no manufacturers have certified, or have disclosed plans to 

certify, a Type C AT PZEV.
20

Decrease Value of Transportation System Credits 

Transportation system credits were included in the ZEV regulation in 2001 to evaluate 

the benefits and issues related to the shared use of ZEVs, and the application of new 

technologies (at that time) such as reservation management, card systems, depot 

management, etc. Manufacturers earn transportation system credits by placing 

vehicles (currently PZEVs, AT PZEVs, TZEVs, and ZEVs) in car-sharing programs 

with automated reservation system technologies, and receive additional credits for 

linking these car-sharing programs to transit. Car sharing programs may be run by a 

manufacturer, or by a third party (e.g., Zipcar). 

Transportation system credits have been a lucrative compliance strategy for 

manufacturers. When originally conceived, transportation system credits were thought 

to give manufacturers a different venue for placing new technologies in multiple 

consumer hands without requiring vehicle purchase or lease. 

In Resolution 09-66, the Board found that the ZEV regulation will help assure the 

successful launch of commercial ZEVs and TZEVs (enhanced AT PZEV, as stated in 

Resolution 09-66) in the next decade. Staff believes limiting the number of credits 

offered for reasons other than vehicle placement is key to ensuring ZEV and TZEV 

commercial success. For this reason, and in an effort to simplify the regulation, staff 

proposes to decrease the amount of extra credits for TZEVs and ZEVs placed in 

transportation systems. The following table 2.3 enumerates the adjusted credit 

volumes for model year 2012 through 2017. 

Table 2.3: Proposed Transportation System Amendments 2012-2017

Type of 

Vehicle

Current Credit 

for Shared 

Use, 

Intelligence

Proposed 

Credit for 

Shared Use, 

Intelligence

Current Credit 

for Linkage to 

Transit

Proposed 

Credit for 

Linkage to 

Transit

TZEV 1.0 0.5 1.0 0.5

ZEV 2.0 1.0 1.0 0.5

End Transportation System Credit Provision after Model Year 2017

Car sharing programs are important for air quality and GHG emission reductions, and 

have potential to play an important role in land use policies such as SB 37526. 

However, the proposed amendments for 2018 and subsequent model years are meant 

to simplify the program and require manufacturers to place large numbers of ZEVs in 

the hands of customers. 

Staff proposes to end the transportation system credit provision after model year 

2017. Staff met with interested stakeholders regarding expiration of this provision and 

 26 SB 375, 2008. Steinberg. September 30, 2008. http://www.leginfo.ca.gov/pub/07-08/bill/sen/sb_0351-

0400/sb_375_bill_20080930_chaptered.pdf Accessed September 7, 2011.
21

learned that monetary incentives for vehicle purchase might have the same effect as 

earning ZEV credits. Currently, most parties earning transportation system credits are 

not regulated, and sell those credits to regulated manufacturers. Staff believes 

ensuring monetary incentives are available for car-sharing programs to purchase 

advanced technology vehicles, like ZEVs and TZEVs, will work similarly to car sharing 

programs earning ZEV credits. This policy shift is reflected in the recently approved 

spending plan for the AB 118 Clean Vehicle Rebate Program which sets aside specific 

amounts of rebate funds for share car programs. 

ZEV Bank Account Conversion

Staff proposes to no longer use non-methane organic gas (NMOG) fleet values when 

calculating manufacturers’ ZEV credit account balances starting for 2015 model year 

compliance. NMOG values are used in ZEV banking to offer an incentive for early 

vehicle placement, because grams per mile (g/mi) NMOG fleet requirements decrease 

each year in LEV II. In the LEV III rulemaking for criteria pollutant emission standards 

for cars and trucks (see rulemaking documents related to LEV III), staff is proposing to 

change from an NMOG fleet standard to an NMOG plus NOx (NMOG + NOx) fleet 

standard. A combined NMOG + NOx value would be higher than the lowest NMOG 

standard in the LEV II regulation, and would not serve as an early compliance 

incentive in the ZEV regulation. 

Staff proposes to divide each ZEV account holder’s bank balances after model year 

2014 compliance by the lowest NMOG value, 0.035, to convert the credits from g/mi

NMOG to straight ZEV credits. This will enable all banking in 2015 and subsequent 

model years to be in ZEV credits, simplifying the regulation. Due to this change, staff 

proposes clarifying language throughout section 1962.1, title 13, CCR to make clear 

the change over from g/mi NMOG ZEV credit to straight ZEV credits. 

PZEV Qualification

Staff is proposing to begin LEV III criteria pollutant fleet standards in model year 2015. 

These will include new tailpipe NMOG + NOx standards as well as evaporative 

emission standards. Staff will also be proposing new emission certification categories 

that go beyond SULEV standards. Due to these change in LEV III, staff proposes that 

in order to earn PZEV credit within the ZEV regulation in 2015 and subsequent model 

years, the vehicle must be certified to the more stringent SULEV 30 or SULEV 20 

standards, and meet LEV III zero-evaporative standards. See the LEV III ISOR for 

more information on these certification categories. 

Charging Requirement Specifications

ARB requires a minimum degree of charging connection compatibility amongst all 

grid-charged electric vehicles. This requirement ensures the use of standard chargers 

to facilitate ZEV and TZEV commercialization. The requirement for minimal charging 

commonality does not preclude the installation of additional vehicle charging 

capabilities such as direct current (DC) fast charge. 
22

Several unanticipated changes in BEV and PHEV designs have occurred since the 

Board adopted infrastructure requirements in 2001. Low-range BEVs and PHEVs with

both 220 and 120 volt charging capability and battery packs small enough to achieve 

reasonable charge times with chargers of less than the 3.3 kilowatt (kW) minimum 

capability were not anticipated when the requirements were adopted. Additionally, 

charging connection capability was never explicitly required of NEVs. 

Staff believes the capability of low-range BEVs to charge on both 220 and 120 volts 

alternating current (VAC) should be encouraged; it enhances the overall compatibility 

of low-range BEVs that make use of shared charging stations. ARB has provided an 

exemption from the current requirements for the 2012 Toyota Plug-in Prius because it 

is both 220 and 120 VAC compatible, but still capable of fully charging its battery in 

less than 2 hours even though it is equipped with a relatively low-power on-board 

charger. Staff proposes to delete the exception for BEVs that only charge at 120 VAC 

and instead allow for lower power on-board chargers on these low-range BEVs, as 

long as an optional minimum charge time requirement of 4 hours is met. 

Since the original charging requirement went into effect, no manufacturer has certified 

a vehicle with the 120 VAC only exemption, and none have indicated an interest in 

future vehicles with 120 VAC only charging. Instead, several manufacturers have 

agreed that an alternative minimum charge time would be a better way to provide an 

exemption to the 3.3 kW minimum power requirement for small vehicles because a 

120 VAC only vehicle would be (1) less attractive to customers, and (2) incompatible 

with the objectives of this charging requirement because these vehicles would be 

incompatible with most planned public infrastructure or even stations installed under 

future building code requirements. 

Staff proposes to require NEVs to meet this same charging connection requirement, 

beginning in model year 2014 to align with charging requirements for other gridcharged electric vehicles. 

Modifications for NEVs

NEVs are simple, low cost, speed limited (25 miles per hour) BEV whose profile is 

often similar to a golf cart. Currently, ZEV credits for producing a NEV are only 

allowed to be used to meet up to certain amounts of a manufacturer’s ZEV 

requirement. Pre-2006 model year NEV credits are more stringently capped than 

2006 and beyond NEV credits. Staff proposes to extend caps for 2012 through 2014, 

to 2015 through 2017 model years. Table 2.4, below, lists staff proposed caps for pre 

2006 NEV credits for 2015 through 2017 model years. 

Table 2.4: Proposed Pre-2006 NEV Credit Limits 

Model Years Portion of the Obligation that: 

Percentage of the 

Obligation that may be 

met with NEV credits

2012 – 2017 Must be met with ZEVs 0%
23

May be met with TZEVs, AT 

PZEVs, or PZEVs 50%

Table 2.5, below, lists staff proposed caps for post-2006 NEV credits for 2015 through 

2017 model years.

Table 2.5: Proposed Post-2006 NEV Credit Limits 

Model Years Portion of the Obligation that: 

Percentage of the 

Obligation that may be 

met with NEV credits

2012 – 2017

Must be met with ZEVs 0%

May be met with TZEVs, AT 

PZEVs, or PZEVs No Limit

Additionally, staff is proposing to add NEV acceleration, top speed, and constant 

speed range testing requirements to the “Test Procedures for 2009 through 2017

Model Zero-Emission Vehicle and Hybrid Electric Vehicles, in the Passenger Car, 

Light-Duty Truck And Medium-Duty Vehicle Classes” to specify testing methods for 

NEV certification.

Clarifications in Penalty Equation

California Health and Safety Code section 43211 applies a penalty to manufacturers

of $5,000 per vehicle not produced in compliance with ARB’s standards. In looking at 

the penalty equation currently in the ZEV regulation, it is not clear how the penalty is 

to be applied to manufacturers out of compliance. In the ZEV regulation, 

manufacturers have a wide array of compliance options, with vehicles earning various 

amounts of credits. However, a manufacturer’s ZEV requirement is ZEV credit 

production; all other vehicle credit types are compliance options, not requirements. 

Therefore, staff interprets the overall penalty for ZEV non-compliance to be $5,000 per 

whole credit not produced. Staff proposes to clarify the regulatory language in 

section 1962.1, title 13, CCR to reflect this intent, and proposes the following 

equations in Table 2.6 to determine the penalty to be applied to manufacturers not in 

compliance with the ZEV regulation:

Table 2.6: Proposed ZEV Regulation Penalty Equations

Applicable 

Model Years

Equation

2009 through 2014 (No. of credits required to be generated for the model year) 

– (Amount of credits submitted for compliance for the model 

year) / (the fleet average requirement for PCs and LDT1s for 

the model year)

2015 and Subsequent (No. of credits required to be generated for the model year) 

– (Amount of credits submitted for compliance for the model 

year)
24

Lead Time Provisions

Currently, manufacturers are given five years of lead time when transitioning into a 

larger size definition. For example, if a manufacturer were to increase in sales, such 

that their 2011 through 2013 sales average exceeded the current LVM threshold of 

60,000 sales, the manufacturer would be subject to the full ZEV requirements in model 

year 2019. However, due to staff proposed modifications for definition and lead time, 

to be discussed in subsection 2.2.1 below, staff proposes that manufacturers starting 

their transition before 2018 will be subject to full ZEV requirements starting in 2018 

model year. This means, for example, if a manufacturer’s 2013 through 2015 sales 

average (for the first time) is 61,000 vehicles, then instead of being subject to LVM 

requirements in 2021, the manufacturer will be subject to LVM requirements in 2018. 

There is a group of current IVMs that will become subject to LVM requirements in 

2018, due to staff’s proposed amendments to the definition thresholds, as discussed 

below in subsection 2.2.1. Some of these current IVMs are closer to becoming an 

LVM under the current definition of 60,000 vehicles sold, and others will only become 

an LVM due to staff proposed definition changes. The purpose of staff’s proposed 

amendments is to bring a larger percentage of manufacturers under the full ZEV 

requirements. This proposed amendment to the lead time provision ensures a level 

playing field, making manufacturers close to the current definition thresholds (60,000 

vehicles per year), subject to LVM requirements at the same time as manufacturers 

effected by staff’s proposed definition change. 

Change of Ownership Provisions

Currently, section 1962.1, title 13, CCR, specifies how to calculate a manufacturer’s 

sales when a change of ownership occurs. Staff proposes to include additional 

clarifying language to this provision to specify when a manufacturer is simultaneously 

producing two model years of vehicles at the time of a change of ownership, the basis 

of determining next model year must be the earlier model year. This amendment 

ensures additional lead time is not earned in this type of situation. 

Vehicle Credit Eligibility

Currently, ZEVs earn one-credit for the ZEV to be “delivered for sale” and the 

additional credits for the ZEV to be “placed in service”. Staff proposes two change 

regarding vehicle credit eligibility. First, staff proposes that a vehicle must be both 

delivered for sale and placed in service in California in order to receive the total credit

amount. This change is due to some manufacturers having internet based sales, and 

questions surrounding the location of a vehicle’s delivery and placement in service. 

Staff’s proposed change clarifies the original intent of the provision. The vehicle may 

still receive partial credit if the vehicle is just delivered for sale. Second, staff 

proposes to place a five year limit on 2012 and prior model year ZEVs to collect 

“placed in service” credit. Staff is proposing this five year limit to ensure that the ZEVs 
25

offered to consumers are moderately current advanced technology and advanced 

technology components have not deteriorated.

Rounding Convention

Staff proposes ZEV credit and debits to be rounded to the nearest thousandth of a 

credit or debit only on the final credit and debit total for a compliance year using the 

conventional rounding method, for 2009 through 2014 model year. For example all 

numbers including the vehicle production numbers, the debit requirement, and the 

credits earned will not be rounded. Only the final total for each compliance year will 

be rounded to the nearest thousandth. This amendment is meant to provide 

clarification and to avoid differences in calculating ZEV credits and debits. Staff 

proposes ZEV credits and debits to be rounded to the nearest thousandth on the final 

credit and debit total for a compliance year using the conventional rounding method 

for 2015 and subsequent model years. 

2.2 Part II: 2018 and Subsequent Model Year Amendments

2.2.1 Amend Manufacturer Size Definitions

A manufacturer’s California sales volume plays an important role in determining a 

manufacturer’s treatment under various LDV regulations. Size is based on a 

manufacturer’s average PC, LDT, and medium duty vehicle (MDV) sales in California. 

Table 2.7 lists the current manufacturer size definitions, and the regulations that apply 

to each manufacturer size definition.

Table 2.7: Current Size Definition Categories and 

Applicable California Regulations

Current Size Category Current Definition

(PC, LDT, MDV Avg 

Sales)

Applicable Regulations

Small Volume

(SVM)

Between 1 and 4,500 Limited LEV II, Limited 

Pavley

Independent Low Volume

(ILVM)

Less than 10,000 (must 

apply to Executive Officer)

Limited LEV II, Limited 

Pavley

Intermediate Volume

(IVM)

Between 4,501 and 60,000 Full LEV II, Full Pavley 

Compliance by 2016, 

Limited ZEV (PZEV Only)

Large Volume

(LVM)

60,001 and greater Manufacturers subject to 

full regulations

Currently, IVMs (those having more than 4,500 PC, LDT, and MDV, on average, in 

California) and LVMs (those having more than 60,000 PC, LDT, and MDV sales, on 

average, in California) are the two groups of manufacturers mandated by the ZEV 

regulation. LVMs are required to comply with a minimum amount of ZEVs, while IVMs 

may meet their entire requirement through PZEV production. Small volume 

manufacturers (SVM) and independent low volume manufacturers (ILVM) are not 
26

required to comply with the ZEV regulation, but may generate, trade, and sell ZEV 

credits. Table 2.8 below lists current LVMs and IVMs, along with an average of each 

company’s 2008 through 2010 vehicle sales.

Table 2.8: Current Manufacturer Size Status

(2008 – 2010 MY Sales Averages, Rounded)

Large Volume Manufacturers

(<60,000 PCs, LDTS, MDVs)

Intermediate Volume 

Manufacturers

(<4,500 PCs, LDTs, MDVS)

Chrysler 89,000 BMW 53,000

Ford 130,000 Daimler 52,000

GM 167,000 Hyundai 34,000

Honda 175,000 Jaguar Land Rover 9,000

Nissan 112,000 Kia 21,000

Toyota 315,000 Mazda 30,000

Mitsubishi 8,400

Subaru 14,000

Volkswagen 52,000

Volvo 8,000

At the 2008 March hearing, the Board did not adopt staff’s proposal to extend the 

transition time for an IVM becoming an LVM from six years to twelve years. Board 

members questioned the differing treatment of the two sizes of manufacturers, 

concluding both sizes should be treated similarly.27 Though sales in California differ 

between each manufacturer, many current IVMs have similar sales figures as LVMs 

on a worldwide basis. 

Inconsistencies exist between the LEV and ZEV regulations regarding LVM and IVM 

definitions and ownership. Under the light-duty GHG regulations, two manufacturers

are to aggregate their sales when one manufacturer owns more than 10 percent of 

another manufacturer. Under the ZEV regulation, two manufacturers are to aggregate 

their sales for size determination when one manufacturer owns greater than 50

percent of another manufacturer. Another discrepancy between the two regulations is 

lead time for manufacturers changing sizes. A manufacturer who has moved from 

IVM status to LVM status under the light-duty GHG regulations has 3 years lead time, 

while under ZEV the manufacturer has 5 years lead time, before having to comply with 

the full requirements. 

As staff began to examine differential treatment of companies under the three

regulations, the need to align ownership thresholds, re-examine the cut points for IVM 

and LVM size definitions, and align lead time provisions became apparent to reduce 

confusion. Staff proposes to decrease the IVM – LVM threshold from 60,000 PCs, 

LDTs, and MDVs on average in California to 20,000 on average. Manufacturers will 

 27ARB, 2008. California Air Resources Board. March 27, 2008 Board Hearing Transcript. 

http://www.arb.ca.gov/board/mt/2008/mt032708.txt
27

be redefined and will determine their requirement based on their 2015 through 2017 

sales average. 

Additionally, to align ownership thresholds between the light-duty GHG fleet 

regulations with the ZEV regulations, staff proposes that two manufacturers’ sales will 

be aggregated for determination of size if one manufacturer owns greater than 33.4

percent of another manufacturer. 

Lastly, staff proposes new lead time provisions under the ZEV regulation, as well as 

provisions for manufacturers decreasing sizes, from LVM to IVM, or IVM to SMV

status. A manufacturer with three consecutive averages over a size threshold will be 

subject to the stepped-up requirement the first model year following the last year of 

the third consecutive threshold. Below is an example of how this would work:

Manufacturer A Sales Averages

2017-2019 2018-2020 2019-2021 2020-2022

19,000 21,000 25,000 28,000

Manufacturer A, formerly an IVM would be subject to LVM requirements in model year 

2023. Similarly, staff proposes manufacturers decreasing in size, and moving from 

one size category to another would only do so after three consecutive averages below 

a size threshold. Below is an example for a manufacturer moving from a larger size 

category to a small size category:

Manufacturer B Sales Averages

2017-2019 2018-2020 2019-2021 2020-2022

6,000 4,200 3,900 4,000

Manufacturer B, formerly an IVM, would be treated as an SVM starting in model year 

2023, and no longer subject to the ZEV regulation. Also, staff proposes that 

manufacturers will no longer be able to qualify as an ILVM for purposes of the ZEV 

regulation after model year 2017.

The effect of these changes is all the IVMs listed in Table 2.8, except Volvo, Subaru, 

Jaguar/Land Rover and Mitsubishi, would be expected to become LVMs in 2018, and 

meet the full ZEV requirements starting that year. This proposed change is needed to 

assure that major manufacturers compete on a level playing field, and to assure a 

variety of ZEVs are available to the consumer. Other changes are discussed in 

Section 2.2.4.

2.2.2 Remove PZEV and AT PZEV Compliance Options

PZEVs and AT PZEVs have been compliance options for manufacturers since 1996. 

Credit multipliers along with high credit amounts were used to encourage 

manufacturers to develop ZEV-enabling technologies, and offset manufacturers’ 

overall ZEV requirements. Most manufacturers are currently selling or have near term 
28

plans to sell PZEVs and AT PZEVs (namely conventional HEVs like the Toyota Prius). 

To date, over 1.7 million PZEVs and 350,000 AT PZEVs have been delivered for sale 

in California as a result of the ZEV regulation. This leads staff to conclude that PZEV 

and AT PZEVs have reached commercialization and are no longer appropriate as a 

compliance option in the ZEV regulation. Additionally, at the 2009 December Board 

Hearing, the Board adopted Resolution 09-66, which resolves that PZEVs and AT 

PZEVs, currently a part of the ZEV regulation, are commercial and can be removed 

from the ZEV regulation as a compliance option. 

Therefore, staff proposes to remove new production of PZEVs and AT PZEVs as 

compliance options under the ZEV regulation for 2018 and subsequent model years. 

Capitalizing on the successful commercialization of these technologies, it is 

appropriate that the LEV III Criteria Pollutant and GHG fleet regulations will rely upon 

these vehicles to aide in compliance with the standards being proposed. The LEV III 

rulemaking for criteria pollutant standards is proposing to require the PC and truck 

fleet to meet the SULEV tailpipe NMOG + NOx fleet standard by 2025. Vehicles will 

also be required to have virtually zero-evaporative emissions. Additionally, the LEV III 

rulemaking for GHG standards could result in over 40 percent of hybridization of the 

PC and truck fleet by 2025, dependent on each manufacturer’s compliance method. 

These regulations will continue to ensure the expansion of volumes of PZEV and AT 

PZEV-like vehicles, allowing the ZEV regulation to focus on commercialization of zero 

and near-zero emitting vehicle technologies. 

2.2.3 Increase ZEV Requirement for 2018 and Subsequent Model Years 

Currently, manufacturers’ 2018 and subsequent model year ZEV requirements are 

held at the same percentage each year, as shown in Table 2.9 below.

Table 2.9: Current 2018 and Subsequent ZEV Credit Requirement

Credit Category Credit Requirement

Minimum ZEV 5.0%

Maximum TZEV* 3.0%

Maximum AT PZEV* 2.0%

Maximum PZEV 6.0%

Total ZEV Requirement 16.0%

*The regulation does not specify the split between TZEVs and AT PZEVs. For 

this analysis, staff assumed AT PZEV TZEV credit requirement would remain 

the same from the 2015 through 2017 requirements . If the PZEV and AT 

PZEVs (highlighted in grey) are moved to the LEV III program as proposed, 

the remaining ZEV requirement under the current regulation would be 8%.

To address one of the program’s primary objectives (ZEV technology 

commercialization and long-term GHG and criteria emission goals), staff proposes to 

increase each manufacturer’s compliance requirements for 2018 and subsequent 

model years, ultimately reaching credit requirements of 6 percent for TZEVs and 16

percent for pure ZEVs in 2025. This increase is outlined in Table 2.10 below. 
29

Table 2.10: Proposed ZEV Credit Requirement for 2018 and Subsequent

Model Year 2018 2019 2020 2021 2022 2023 2024 2025 and 

Subsequent

Overall ZEV 

Requirement 4.5% 7.0% 9.5% 12.0% 14.5% 17.0% 19.5% 22.0%

Min. ZEV 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

Max. TZEV 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

As shown in Table 2.10 above, the proposed overall ZEV credit requirement, between 

model year 2018 and model year 2022, is less than the current program. Because 

staff is proposing to revise the number of credits earned per vehicle (typically by one 

half), and PZEVs and AT PZEVs no longer would count towards meeting a 

manufacturer’s ZEV obligation, it is more illustrative to compare the actual number of 

ZEVs required to be produced given the current and proposed crediting structure. This 

is shown below in Figure 2.

Figure 2: Staff’s Proposal vs. Current Regulation – Annual Sales Requirements

In establishing the proposed requirements above, staff reviewed a range of 

compliance alternatives to ensure program objectives were met, including work done 

 -

 50,000

 100,000

 150,000

 200,000

 250,000

2018 2019 2020 2021 2022 2023 2024 2025

Staff's Proposal - ZEVs

Staff's Proposal - TZEVs

Current Regulation -ZEVs

Current Regulation -TZEVs

15.4% of New

Sales in 2025

Current Regulation - 4% 

of New Sales in 2025
30

in 2009 to examine the LDV sector meeting long term GHG emission reduction goals. 

(ARB, 2009a) Starting from staff’s 2050 analysis, staff considered the appropriate 

level of ZEVs and TZEVs that should be required in the 2018 through 2025 model 

year timeframe based on a number of factors: ZEV platforms, technology cost curves, 

and the future GHG fleet standards. 

Staff’s 2050 analysis suggests over 35 percent of LVMs’ 2025 LDV sales would need 

to be ZEVs and TZEVs to keep California on a trajectory to meet the 2050 GHG 

reduction goal. In terms of PC sales that would need to be ZEVs or TZEVs would 

likely be higher because staff expects that manufacturers will preferentially produce 

ZEV as PCs rather than LDTs, in order to reduce costs, especially for BEVs. While 

these sorts of production numbers would likely help the LDV sector reach its long term 

GHG emission reduction goals, the effect on the PC market in such a short timeframe 

suggests staff consider less stringent requirements. Staff chose requirements which 

push ZEVs and TZEVs to 15 percent of new LDV sales by 2025.

Another important factor staff considered in choosing future requirements was cost. In 

order to highlight the scale of cost reductions anticipated as a result of high volume 

production, the following four Figures (3, 4, 5, and 6) show declining production costs, 

over the period of the regulation, for the advanced batteries and fuel cell systems 

considered in the analysis. To highlight the most relevant and expensive components

of the advanced vehicle platforms, the values shown here assume direct 

manufacturing.28 

Generally, battery and fuel cell costs decline over time due to several factors. As 

production volumes increase, costs decline due to economies of scale. Additionally, 

as manufacturers operate production systems for a number of years, costs can 

decline from the manufacturing process as improvements are identified. Both of these 

factors (production volume and production experience) are incorporated into the timebased costs presented in Figures 3 and 5.

Figure 3 shows the declining costs of batteries, as assumed in the joint model used in 

staff’s ACC analysis, with time on three platforms: a PHEV with 20 mile electric range 

(PHEV20), a BEV with 75 mile all-electric range (BEV 75), and a BEV with 100 mile 

all-electric range (BEV100). Costs for PHEV battery systems are higher than BEVs 

(on a per kWh basis) primarily because the relative cost of auxiliary systems (battery 

thermal management and controls) increases with smaller batteries.

 28 High volume production is assumed by 2025 on world-wide platforms (greater than 100,000 units/yr).
31

Figure 3: Battery System Direct Manufacturing Cost vs. Time (2009$)

As described in the LEVIII ISOR Section III-A-4.3, battery cost projections (above) 

were developed jointly with the U.S. EPA and NHTSA and leveraged analysis by 

Argonne National Laboratory (ANL), as well as input from manufacturers. Figure 4 

shows battery cost reductions with increasing production of battery packs.29

Figure 4: Battery System Direct Manufacturing Cost vs. Production Scale 

(2009$) (ANL, 2010)

 29 ANL, 2010. Argonne National Laboratory. D.J.Santini et al, EVS-25, Nov 5-9 2010. “Modeling of Manufacturing 

Costs of Lithium-Ion Batteries for HEVs, PHEVs, and EVs.”
32

Figure 5 shows the declining cost of fuel cell systems as a function of time, as 

assumed in the joint model used in staff’s ACC analysis. 

Figure 5: Fuel Cell System Direct Manufacturing Cost vs. Time (2009$)* 

*does not include hydrogen storage

Fuel cell cost projections relied, in part, on high volume cost functions developed by 

Directed Technologies Incorporated (DTI), one of two long-term contractors evaluating 

future system costs for the U.S. DOE. Figure 6 below show DTI’s fuel cell system 

costs based on annual production volumes.

Figure 6: Fuel Cell System Direct Manufacturing Costs vs. Production Scale

(2009$)30

 30 DTI, 2010. Directed Technologies Inc., 2010 U.S. DOE Merit Review. June 7-11, 2010. “Mass Production Cost 

Estimation for Automotive Fuel Cell Systems”.
33

Staff’s proposed requirements push production volumes to levels that reduce 

incremental ZEV prices below what would have occurred in the existing regulation. It 

also encourages multiple platforms, and brings a selection of vehicles to a larger 

portion of the market (well beyond early adopters). 

Lastly, staff considered expected ZEVs under future GHG fleet standards for LDVs. 

Without a ZEV regulation, the California proposed GHG standards would likely result 

in approximately 6 percent of annual sales by 2025 would be ZEVs and TZEVs. This 

level of penetration would not likely achieve the cost reductions needed for 

commercialization in the timeframe needed to meet long term emission reduction 

goals. 

2.2.4 IVM Treatment 

As discussed above, staff is proposing to reduce the sales volume which separates an 

IVM from an LVM from 60,000 annual sales in California to 20,000 annual sales, 

starting in 2018. Four manufacturers would remain IVMs (Subaru, Volvo, Jaguar Land 

Rover, and Mitsubishi). This raises the issue of what should be the ZEV requirements 

for these smaller manufacturers? Currently, IVMs are allowed to meet their entire 

ZEV requirement with credits from conventional PZEVs. Due to the proposed removal 

of PZEVs as a compliance option for ZEV in 2018 and subsequent model years, staff 

considered what ZEV requirements, if any, should apply to IVMs beginning in 2018. 

These manufacturers are significantly smaller than other manufacturers in terms of 

research and development funds, California sales, and worldwide sales. However, 

most have displayed ZEV or TZEVs at recent auto shows, and have active ZEV 

development programs. This is necessary to remain competitive with LVMs. What 

limits the ability of IVMs is the potential of having to develop multiple technologies 

given their relatively smaller research, development, and demonstration (RD&D)
34

budgets. Therefore, staff proposes that IVMs be subject to the ZEV mandate, but 

have no limits on the type of ZEVs, other than NEVs, they produce. For example, an 

IVM could fulfill the requirements by producing only TZEVs (e.g. PHEVs). By 

comparison, a LVM that choses to produce TZEVs must also produce specified 

numbers of ZEVs. Further flexibilities for IVMs will be discussed throughout the 

following subsections.

2.2.5 Excess PZEV and AT PZEV Credits Treatment

Staff’s proposal to remove new production of PZEVs and AT PZEVs as compliance 

options for the ZEV program for model years 2018 and beyond will likely leave 

manufacturers with banked PZEV and AT PZEV credits. Manufacturers’ PZEV and 

AT PZEV banks reflect over compliance with the ZEV regulation, as well as old 

multipliers offered for early compliance. In a shift toward requiring manufacturers to 

place vehicles in order to comply with the regulation rather than use banked credits, 

staff believes it is appropriate to limit the use of banked ZEV credits in 2018 and 

subsequent model years. Staff proposes to first discount the banked PZEV and AT 

PZEV credits, then cap their use at 25 percent of a manufacturer’s portion of its overall 

ZEV requirement that may be fulfilled with credits from TZEVs. Banked PZEV and AT 

PZEV credits could not be used to comply with any of the portion of the requirement 

that must be met with ZEVs. Staff’s proposed discount for the PZEV and AT PZEV 

credit banks after model year 2017 compliance may be found in Table 2.11 below.

Table 2.11: Proposed Credit Discounts for PZEV and AT PZEV Credit Banks

Affected 

Manufacturer 

Size

Discount Equivalency 

PZEV LVM 93.25% 1 TZEV(20 mile) = ~51 PZEVs

PZEV IVM 75% 1 TZEV(20 mile) = ~14 PZEVs

AT PZEV IVM and LVM 75% 1 TZEV(20 mile) = ~5 AT PZEVs

The cap on usage of PZEV and AT PZEV credits for 25 percent of the portion of a 

manufacturer’s ZEV requirement that may be met with TZEVs, equals approximately 

7 percent to 14 percent of a manufacturer’s overall ZEV requirement each year. 

For IVMs, for model years 2018 and 2019, staff proposes to not cap the usage of 

banked PZEV and AT PZEV credits as a way to increase flexibility for these smaller

manufacturers as they develop new products. For 2020 and subsequent model years, 

staff proposes to cap the usage of PZEV and AT PZEV credits to 25 percent of an 

IVM’s overall requirement. Staff also proposes to cap NEV credits in the same 

manner as banked PZEV and AT PZEV credits. Therefore, all PZEV, AT PZEV, and 

NEV credits would be under the same cap in 2018 and subsequent model years. The 

proposed allowed percentages are enumerated in Table 2.12 below.

Table 2.12: Proposed Limits on Banked PZEV and AT PZEV Credits, and NEV 

Credits for 2018 and Subsequent Model Years:

2018 2019 2020 2021 2022 2023 2024 2025
35

Allowed Usage 

in an LVM’s 

TZEV portion of 

Requirement

Up to 25%

OR

Allowed Usage 

in an LVM’s 

overall 

Requirement

13.9% 10.7% 9.2% 8.3% 7.8% 7.4% 7.1% 6.8%

Allowed Usage 

in an IVM’s 

overall 

Requirement

100% 100% Up to 25%

Staff’s proposal helps to move manufacturers from relying on banked ZEV credits for 

compliance, and helps to ensure ZEVs and TZEVs will be produced in compliance 

with the regulations. 

2.2.6 ZEV Treatment and Credits

Currently, ZEV credits for Type III, Type IV, and Type V ZEVs are scheduled to 

decrease for 2018 and subsequent model years. Below, Table 2.13 shows credit 

levels currently in the regulation for 2018 and subsequent model years.

Table 2.13: Current ZEV Types and Credit Levels

Definition 2009 through 

2017

2018 and 

Subsequent

NEVs Low Speed Neighborhood 

Electric Vehicles

0.30 0.30

Type 0 <50 Mile BEVs 1 1

Type I >50 - <75 Mile BEVs 2 2

Type I.5 >75 - <100 Mile BEVs 2.5 2.5

Type II >100 Mile BEVs 3 3

Type III >100 Mile FCVs (with fast 

refueling) OR 

>200 Mile BEVs

4 3

Type IV >200 Mile FCVs 

(with fast refueling)

5 3

Type V >300 Mile FCVs 

(with fast refueling)

7 3

The current system of tiered credit levels encourages manufacturers to produce a 

vehicle meeting the range threshold rather than rewarding the actual mileage of the 

vehicle. Staff considered several ways of amending the current crediting system. 

Credit factors such as a vehicle’s physical size, weight, a manufacturer’s monetary 

investment in the vehicle technology, refueling capabilities, refueling access, long term 

vehicle cost potential, GHG well-to-wheel (WTW) performance, as well as others were 
36

considered and discussed at a May 2010 workshop. In the spirit of simplicity, many 

factors were discarded due to the subjective nature of the factor, such as a 

manufacturer’s investment in the technology. Other factors had little to do with the 

vehicle’s design and engineering, or the manufacturer would have no control over the 

amount of credit earned. Staff considered including a vehicle’s size in a future credit 

system, which would encourage ZEV technologies to be placed on larger platform 

vehicles, and credit based on the vehicle’s footprint and range. As staff explored this 

option, it appeared that longer range vehicles would generally be on larger platforms, 

which reduced the need to credit the vehicle’s footprint as well as its range. 

For the reasons stated above, and in an effort to simplify the regulation, staff is 

proposing to base the amount of credits earned by each ZEV exclusively on the 

vehicle’s urban dynamometer driving schedule (UDDS) range. Credits for ZEVs would 

range from 1 and 4 credits each, with a minimum 50 mile range ZEV earning 1 credit 

and a 350 mile range ZEV earning 4 credits. Below is the staff’s proposed credit 

equation for ZEVs:

ZEV Credit = (0.01) * (UDDS range) + 0.5

Figure 7 below shows the amount of credit various vehicles would receive using staff’s 

proposed ZEV credit equation, along with the current credit structure.

Figure 7: Proposed ZEV Credits As Compared to Current ZEV Credits

(2018 and Subsequent Model Years)

Essentially, a ZEV will receive half as much credit in 2018 and subsequent model 

years as was earned in 2017 and earlier model years. To align credits earned by 

0

1

2

3

4

5

0 50 100 150 200 250 300 350 400

Credit 

UDDS mi Range

50 Mile BEV

200 Mile FCV

Credit= 3 / 2.5

100 Mile BEV

Credit= 3 / 1.5

350 Mile FCV

Credit= 3 / 4

75 Mile BEV

Credit= 2.5 / 

Current 2018+ ZEV Credits

Proposed 2018+ ZEV Credits
37

NEVs in 2018 and later model years, staff proposes to reduce NEV credits by 

50percent as well, from 0.30 to 0.15 credits each. 

Additionally, staff proposes BEVx credit will be equivalent to that received by BEVs, 

based on range. Like in 2012 through 2017 model years, manufacturers will be 

allowed to meet up to 50 percent of the portion of their requirement that must be met 

with pure ZEVs with credits from BEVxs. 

2.2.7 TZEV Treatment and Credits

AT PZEVs were included as a compliance option in the ZEV regulation to accelerate 

the development and manufacturing capacity of the component technologies that are 

also necessary to build ZEVs. These components include traction motors, power 

electronics, batteries, battery management systems, and hydrogen storage tanks. 

About 350,000 AT PZEVs have been placed in California since 2004. ZEV 

technologies have improved at a faster pace than normal market forces would have 

otherwise expected due to commercialization of AT PZEVs. As a result, the industry 

is now progressing to a “transition” phase where ZEV component production is 

increasing, and the resulting component costs are decreasing. 

The emphasis of the AT PZEV compliance option within the ZEV regulation was the 

initial introduction of these component technologies into production vehicles. TZEVs 

will encourage further evolution of these ZEV components and technologies by 

significantly “raising the bar” for qualifying vehicles. In this way, staff believes the 

overall California fleet will incorporate more ZEV-component intensive vehicles, and 

will provide more significant emissions reduction benefits from actual 

zero-emission VMT and zero-emissions fuel use. For this reason, staff is proposing a 

simplified TZEV credit system for 2018 and subsequent model years based primarily 

on zero emission VMT capability. Table 2.14 below shows staff’s proposed equation 

for TZEV zero emission VMT allowance.

Table 2.14: TZEV Zero-Emission VMT Allowance

UDDS Test Cycle Range 

(Rcda) Credit

<10 miles 0.0

>10 miles range TZEV Credit = [(0.01) * EAER + 0.3]

>80 miles (credit cap) 1.3

TZEVs with at least 10 miles all electric UDDS range will be eligible for zero emission 

VMT allowance. Manufacturers may earn an extra allowance of 0.2 if the vehicle is 

capable of driving 10 miles all electric on the US06. Figure 8 below shows the total 

credit amount manufacturers would be eligible for in 2018 and subsequent model 

years. 

Figure 8: Proposed TZEV Credits - PHEVs
38

Staff also proposes a fixed allowance for HICE vehicles of 0.75. HICE vehicles that 

also have all-electric range would also be eligible for a zero emission VMT allowance, 

but subject to an overall credit cap of 1.25.

New technologies, performance features, and vehicle types have recently emerged 

that are challenging to assess under the current ZEV regulatory structure. A key 

example of such a development is the range-extended BEV explained earlier in this 

staff report: a BEV with an APU range extender. This is particularly challenging when 

many of these vehicles are only just now being announced or introduced into the 

market and little is known about them. PHEV driver behavior is still relatively unknown 

and staff cannot predict performance results based on vehicle attributes. Over the 

next two to three years, staff commits to studying PHEV and BEVx user-behavior to 

find a more refined attribute-based methodology that can better correlate with

desirable zero-emission VMT and emissions reductions. 

2.2.8 Travel Provision

During the development of the TAR, the involved agencies jointly met with states that

have adopted California’s air quality regulations through the Clean Air Act, often 

referred to as Section 177 ZEV states. “Several states mentioned activities they have 

underway to develop the infrastructure needed to support electrified vehicles.” (EPA,

2010, pp.2-11) As proposed above, staff believes it is appropriate to extend the travel 

provision for Type I, Type I.5, and Type II ZEVs (BEVs) through 2017. However, for 

2018 and subsequent model years, staff believes BEVs will be reaching commercial 

levels, and be available in most states. Nissan has announced that the Leaf will be 

available for model year 2012 in over half of the United States.31 From that 

 31 Nissan, 2011. Press Release, July 19,2011. “Nissan To Launch All-Electric Leaf As Upgraded 2012 Model In 

New U.S. Markets” http://www.nissannews.com/pressrelease/2682/185/nissan-launch-all-electric-leaf-upgraded2012-model. 
39

perspective, staff believes it is not appropriate to extend the travel provision for BEV 

credits past the 2017 model year. 

Commercialization of FCVs lags commercialization of BEVs by several years. BEVs 

have entered the marketplace this year, while the first FCVs in volume production are 

not expected until 2015 or later, and then only in those regions such as California and 

New York that are preparing the necessary hydrogen fueling infrastructure. Thus staff 

proposes to extend travel for FCV credits. Travel would be extended for FCVs until 

there are clear plans for sufficient hydrogen infrastructure in Section 177 ZEV states to 

support these vehicles. 

2.2.9 GHG Over-Compliance Credits

On July 29, 2011, President Barack Obama announced a joint agreement between the 

U.S. EPA, NHTSA, the state of California, the United Auto Workers (UAW) and 

thirteen manufacturers to improve GHG emission performance of all PCs by 2025.32 

California submitted a letter to U.S. EPA Administrator Lisa Jackson and United States 

Department of Transportation (U.S. DOT) Secretary Ray LaHood on July 28, 2011 

affirming its commitment to a one-national GHG tailpipe standard. The following 

statement was included in the July 28, 2011 commitment letter: 

“California commits to propose that its revised ZEV program for the 2018-2021 

MYs include a provision providing that over-compliance with the federal GHG 

standards in the prior model year may be used to reduce in part a manufacturer’s 

ZEV obligation in the next model year.”33

Staff proposes to allow a manufacturer that complies with its national light-duty fleet 

GHG standard to use those over-compliance credits to offset a portion of its ZEV 

requirement in 2018 through 2021 model years. Table 2.15, below, enumerates the 

percentage of ZEV credits a manufacturer may off-set with GHG over-compliance

credits.

Table 2.15: Maximum Percentage of ZEV Credit Offset Each Model Year

2018 2019 2020 2021

50% 50% 40% 30%

The percentages in Table 2.15 represent two caps: 1) the total percentage of a 

manufacturer’s requirement able to be met with GHG-ZEV over-compliance credits, 

and 2) the maximum percentage allowed to be met within the portion of the 

regulations that must be met with ZEVs. Manufacturers will not be limited (other than 

by the cap on the total requirement) on use of GHG-ZEV over-compliance credits 

within the TZEV category. 

 32 White House, 2011. United States White House. Press Release. July 29, 2011. “President Obama Announces 

Historic 54.5 MPG Fuel Efficiency Standards.” http://www.whitehouse.gov/the-press-office/2011/07/29/presidentobama-announces-historic-545-mpg-fuel-efficiency-standard. Accessed September 9, 2011 33 ARB, 2011a. California Air Resources Board. Commitment Letter. July 28, 2011. 

http://www.epa.gov/oms/climate/letters/carb-commitment-ltr.pdf. 
40

Based on historical compliance with the ARB LEV II regulation and from NHTSA’s 

Corporate Average Fuel Economy (CAFE) program, manufacturers often run debits 

and credits in alternating model years that balance out due to carry-back and 

carry-forward provisions. Staff projects that fully compliant manufacturers will typically 

operate with 1 to 4 grams carbon dioxide per mile (gCO2/mile) of credits or debits 

GHG credits as a normal course of action as part of the GHG program. It is not the 

intent of the ZEV-GHG over-compliance provisions to reward this small fluctuation in

g/mi credits that naturally occur from program compliance or to reward accumulated 

GHG emission reductions that occurred before model year 2018. 

To award consistent and planned over-compliance with the GHG fleet standard, staff

proposes that manufacturers be eligible to utilize the ZEV-GHG over-compliance 

provisions only if particular conditions are met before the regulation start date and in 

each model year (i.e., between 2018-2021) of the program. First, staff proposes that 

the following two preconditions must be met in order for manufacturers to qualify for 

use of the ZEV-GHG over-compliance provision:

1. Model year 2017 GHG precondition: A company must have no GHG program 

debits in model year 2017 and no outstanding debits from previous model 

years.

2. Model year 2017 ZEV precondition: A company must have no ZEV program 

debits in model year 2017 and no outstanding debits from previous model 

years. 

Staff proposes a manufacturer must submit an application to ARB by May 1, 2018 

documenting the company’s intent to use the ZEV-GHG over-compliance provision. 

The application must include test model, vehicle sales, and GHG standard data for 

documenting federal compliance model year 2017 data for the GHG program. The 

application must also declare any existing credits or debits from the 2012-2016 GHG 

fleet regulations. Lastly, a manufacturer must submit its projected product plan 

information for model years 2018-2021 that documents its expected GHG program 

over-compliance by at least 2 gCO2/mile in each model year through the entire period 

without receiving GHG program credits from any other automaker for model years 

2018 through 2021.

To lessen reporting issues and allow manufacturers adequate planning time, staff 

proposes ZEV-GHG over-compliance credits be based on the manufacturer’s previous 

model year compliance. For example, a manufacturer generating ZEV-GHG 

over-compliance credits to meet ZEV requirements in model year 2019 would 

calculate GHG over-compliance based on model year 2018. Annually, manufacturers 

would be required to report credits/debits from the model year, any remaining 

credits/debits from previous model years, and projected credits/debits for future years 

through 2021. Also, staff proposes at a minimum, the manufacturer must over-comply 
41

by at least 2 gCO2/mile each year, and must not include the following credits and 

multipliers in calculating a manufacturer’s GHG fleet standard over-compliance:

1. Additional credit earned from additional incentive multipliers greater than 1.0 

(i.e. truck technology credit multipliers), and

2. Banked GHG gCO2/mile credits from previous model years or from other 

manufacturers. 

Note, that California is not proposing to include advanced electric-drive vehicle 

technology multiplier incentives in the 2017 and subsequent GHG standards. 

However, manufacturers will have the option of directly complying with California’s 

standards or complying with the federal standards. In the event of a given 

manufacturer selecting the federal compliance option, the manufacturer will also not 

be allowed to include the multiplier received for advanced electric drive vehicle 

technologies in their ZEV-GHG over-compliance calculation. 

Staff proposes the following equation be used to calculate a manufacturer’s ZEV-GHG 

over-compliance credits for use in California and Section 177 ZEV states: 

ZEV Credit Calculation (for given model year):

Manufacturers will be required to remove the gCO2/mile credits used to calculate ZEV 

offset credits from their GHG fleet standard banks. 

In the event that a manufacturer is not generating a GHG compliance credit or 

receives GHG credit from any other automaker for any model year from 2018 through 

2021, the company would no longer be eligible for the ZEV-GHG over-compliance 

program, and would be subject to the full requirements and penalties of the ZEV 

regulation. 

2.2.10 Minor Amendments

Counting ZEVs in Applicable Sales Volume

Each model year, manufacturers calculate their applicable vehicle sales volume to

which their ZEV requirement is applied. In 2003, staff modified the regulation to not 

count a manufacturer’s ZEVs produced in the manufacturer’s applicable sales volume. 

This was to prevent NEV manufacturers from generating a larger requirement than

could be met, due to NEVs earning less than one ZEV credit. When considering the 

(Manufacturer U.S. Sales of PC & LDT) * (gCO2/mile

below manufacturer GHG standard)

(manufacturer GHG standard)
42

effect of this provision on developing future requirements, staff concluded removing 

this provision for manufacturers would simplify the program and not have an adverse 

effect on manufacturers.

Staff proposes to end this provision for ZEVs for 2018 and subsequent model years, 

and include all ZEVs produced in the manufacturer’s applicable sales volume. 

However, staff proposes that NEV manufacturers would not include NEVs in their 

applicable sales volumes to prevent manufacturers from facing a larger requirement 

than could be fulfilled. 

Amendment to Applicable Sales Volume Determination “Previous Years Method”

Since 2003, staff has allowed each manufacturer to choose its applicable sales 

volume determination method. As stated previously, a manufacturer’s applicable 

sales volume is the number of vehicles a manufacturer’s requirement is applied to for 

a model year. Manufacturers may choose to use their current year sales, or an 

average of previous year sales, from the fourth, fifth, and sixth model years prior to the 

model year with which they are complying. For example, for the 2011 model year, 

manufacturers may choose their applicable sales volume based on 2011 sales, or on 

an average of 2005, 2006 and 2007 model year sales. Manufacturers are allowed to 

switch methods each year. This provision causes uncertainty for ARB when trying to 

determine how many ZEVs and TZEVs will be made each year. Also, manufacturers 

are able to take advantage of a low sales volume year to reduce their obligation for up 

to nine years, which greatly impacts the number of ZEVs required.

Staff proposes a manufacturer’s applicable sales volume to be based on an average 

of the second, third, and fourth years back. For example, for 2019, a manufacturer’s 

applicable sales volume would be based on an average of 2016, 2017, and 2018 

model year sales. This change would make the applicable average more 

contemporaneous and helps even out the sales bumps year to year. However, staff 

understands unforeseen circumstances cannot be planned for, and should be 

considered in regards to a manufacturer’s ZEV requirement. An example of an 

unforeseen circumstance could be a severe economic downturn or a natural disaster. 

Staff proposes that manufacturers could apply to the Executive Officer to use a current 

model year for their applicable sales volume, for a maximum of two model years. 

Manufacturers applying to the Executive Officer would need to do so by January 1 of 

the year following the compliance model year. For example, a manufacturer applying 

to use a current model year for their applicable sales volume for model year 2020, 

would need to apply to the Executive Officer no later than January 1, 2021. If a 

manufacturer does switch to the same year method, then switch back, it only 

continues to benefit from a bad year for four years, as it is included into its previous 

second, third, and fourth year average.

Amendments to Carry Back Provision

Currently, manufacturers are allowed to carry a ZEV credit deficit for up to three model 

years. For example, a manufacturer who does not meet its ZEV requirement in model 

year 2016 would not be subject to penalties for non-compliance until after model year 
43

2018 compliance, and would be allowed to make up deficits with credits from ZEVs in 

model years 2017 and 2018. Up to this point, all manufacturers have been in full 

compliance with the ZEV regulation, and have not had to make use of this provision. 

However, this provision creates uncertainty in the number of ZEVs to be delivered for 

sale each year. 

In an effort to strengthen and provide more certainty of the number of ZEVs to be 

delivered to California for a given model year, staff proposes to shorten a 

manufacturer’s allowed deficit to one year. This means, for example, a manufacturer 

could fail to submit the required amount of ZEV credits in 2019, and proceed to make 

up the credit deficit in 2020 model year compliance. After model year 2020 

compliance, the manufacturer would be subject to ZEV penalties.

Removing Placed In Service Requirement

Currently, for manufacturers to receive full credit for ZEVs, each ZEV must be placed 

in service.34 This requirement was added in 2001 to encourage manufacturers to 

place ZEVs, particularly NEVs, with end-users and further ZEV commercialization and 

markets. Manufacturers currently receive one credit for each vehicle delivered for 

sale, and earn the rest of the credits for each vehicle when it is placed in service (i.e. 

sold or leased to an end user). Staff believes this requirement will no longer be 

necessary for BEVs in 2018 and subsequent model years as requirements increase. 

This greatly simplifies tracking and acknowledges the maturing market for BEVs. 

However, staff will continue to require all FCVs and NEVs to be placed in service in 

order to earn credit through the regulation. FCVs need to be tracked by vehicle 

identification number (VIN) for purposes of the travel provision, and accounting across 

states. The regulation will also retain ARB’s authority to request VINs of delivered 

ZEVs to verify the vehicles have been delivered to California. 

Additional minor modifications are discussed in Section 9 of this ISOR. 

 34 CCR 1962.1(h)(7) states “placed in service” means “having been sold or leased to an end-user and not to a 

dealer or other distribution chain entity, and having been individually registered for on-road use by the California 

Department of Motor Vehicles.”
44

3 EFFECT OF PROPOSED CHANGES

This section provides an assessment of the industry wide number of vehicles that may 

be produced due to the proposed changes. Sections 5, 6 and 7 then use these 

estimates to project the economic and environmental impacts of the proposed 

changes. Staff is proposing limited amendments to the 2012 through 2017 timeframe

which have little impact on the numbers of vehicles produced in compliance with the 

ZEV requirements. Staff’s analysis of manufacturer’s current ZEV credit banks is in 

subsection 3.1. Staff’s analysis of the effects of the proposed changes to Type V 

credits, and decreased IVM requirement is presented below in subsection 3.2. The

bulk of staff’s analysis focuses on the 2018 through 2025 timeframe, and can be found 

below in subsection 3.3.

3.1 Overall Effects of Manufacturer’s Banked ZEV Credits

Manufacturers have over complied with the ZEV regulation, which has caused them to 

have banks of excess ZEV credits. A manufacturer may bank an unlimited amount of 

credits from each vehicle category. Table 3.1 below shows manufacturer’s ZEV bank 

balances as of September 30, 2011. 

Table 3.1: Manufacturer Current Bank Balances (g/mi NMOG)*

Manufacturer ZEVs

(excluding NEVs) NEVs Enhanced AT PZEVs AT PZEVs PZEVs

BMW 106.000 0.000 0.000 0.000 209.547

Chrysler Group 55.611 665.316 0.000 0.000 0.000

Ford 274.687 1,069.090 0.000 596.272 1,135.289

FUJI Heavy 

Industries/Subaru 0.000 0.000 0.000 0.000 65.662

General Motors 408.156 787.166 0.000 454.352 120.388

Honda 404.105 804.666 0.000 946.318 62.655

Hyundai 31.360 0.000 0.000 0.000 22.378

KIA 22.647 0.000 0.000 0.000 0.000

Land Rover 0.000 0.000 0.000 0.000 10.139

Mazda 0.000 0.000 0.000 0.000 246.998

Mercedes Benz 28.520 193.066 0.000 9.849 6.278

Mitsubishi 1.400 0.000 0.000 0.000 53.432

Nissan 189.321 0.000 0.000 0.000 1,523.912

Tesla 0.000 0.000 0.000 0.000 0.000

Toyota 1,116.293 0.000 7.721 6,723.705 734.941

Volkswagen 35.558 0.000 0.000 17.130 11.929

Volvo 0.000 0.000 0.000 0.000 108.493
45

Zipcar 0.000 0.000 0.000 0.000 17.083

TOTALS 2,673.657 3,519.305 7.721 8,747.627 4,329.126

*Manufacturer ZEV bank balances are posted each year, on September 30, on the following 

website: http://www.arb.ca.gov/msprog/zevprog/zevcredits/2010zevcredits.htm

Manufacturers can comply in innumerable ways with the regulation. Manufacturers 

may fulfill their entire requirement with credits from ZEVs, or produce more AT PZEVs 

to fulfill the portion of the requirement that may be met with PZEVs. The regulation 

defines the upper limits of how the various credit categories can be used to fulfill a 

manufacturer’s requirement. 

Taking the manufacturer’s current credit banks into account, staff analyzed potential 

credit usage in the 2012 through 2017 timeframe, and in the 2018 through 2025 

timeframe. 

For 2012 through 2017 model year, it is difficult to determine the impact of banked 

PZEV and AT PZEVs credits on actual PZEV and AT PZEV production. PZEVs and 

AT PZEVs are a compliance option within the regulation. For example, some 

manufacturers use NEV credits in lieu of producing AT PZEVs. Staff is proposing to 

allow manufacturers to use their banked PZEV and AT PZEV credits to meet up to 25

percent of the TZEV portion of their requirement in 2018 and subsequent model years. 

This could incentivize manufacturers to continue producing PZEV and AT PZEVs 

through model year 2017, as discussed below. 

As shown above in Table 3.1, manufacturers currently have no banked TZEV (referred 

to in the table as Enhanced AT PZEV) credits, except for one manufacturer. It is 

possible that LVMs might use ZEV credits, and NEV credits, as allowed, to meet some 

of the TZEV portion of their requirement. Still, staff predicts most LVMs will produce 

TZEVs to fulfill this portion of their 2012 through 2017 requirement. 

Looking at LVM’s minimum ZEV requirement, and assuming manufacturers only used 

banked credits to comply with the regulation in 2012 through 2017, most LVMs would 

be able to comply through model year 2014 using only banked ZEV credits. Four out 

of six LVMs would be able to comply through model year 2015, and one LVM would 

likely be able to meet their 2016 minimum ZEV obligation with banked credits. 

In order to complete an analysis of possible credit usage in 2018 and subsequent 

model years, multiple assumptions must be made. Though many manufacturers have 

announced plans to produce ZEV program vehicles (see Section 1), few shed light on 

expected volumes. For the purposes of this analysis, staff did not assume an increase 

in manufacturer’s banked ZEV credits. It is clear that most manufacturers will likely 

need to produce TZEVs, since there are few TZEV credits currently in manufacturer’s 

ZEV banks. 

Assuming LVMs keep their current credit banks constant through model year 2017, 

meaning they are meeting their yearly obligations through model year 2017 by 
46

producing vehicles and not using banked credits, most manufacturers would be able 

to comply only with their model year 2018 minimum ZEV requirement. 

This credit analysis leads to two conclusions: 1) most manufacturers will likely need to 

produce TZEVs to meet a portion of their 2012 and subsequent model year 

requirements, and 2) manufacturers will run out of pure ZEV credits, and will need to 

produce ZEVs in order to meet their future requirements.35 

3.2 Effects of Proposed Changes: 2009 through 2017 Model Years

Decreased IVM Requirements: 2015 through 2017 Model Years

Staff is proposing to decrease the overall requirement that applies to IVMs from 14

percent to 12 percent credits each year for model years 2015 through 2017. Table 3.2

shows the differential in expected PZEVs due to staff’s proposed change.

Table 3.2: Effect of Decreased IVM Requirements in 2015 through 2017

Existing IVM 

Requirement

Proposed IVM 

Requirement

Differential

Annual Credit 

Percentage 14% 12% 2% less per year

Annual Percentage of 

IVM Sales That Are PZEV 70% 60% 10% less per year

Cumulative PZEV Sales 617,000 530,000 87,000 fewer

cumulatively

The proposed decreased PZEV requirements for IVMs will likely result in a cost 

savings over existing requirements. Because IVMs will be required to start complying 

with TZEVs in 2018, IVMs will likely use cost savings from decreased PZEV 

production to invest in research, development, and demonstration (RD&D) in TZEV 

technologies (the reason for the proposed change). 

3.3 Effects of Proposed Changes: 2018 and Subsequent Model Years

2018 – 2025 Model Year Likely Compliance Scenario Development

Manufacturers are offered much flexibility in complying with the ZEV regulation. As 

explained above, LVMs must comply with a minimum amount of credit from producing 

ZEVs. Staff proposes that LVMs be allowed to meet the rest of their requirement with 

credits from producing TZEVs. Thus LVMs may fulfill their entire requirement with 

credits from ZEVs, but may not fulfill their entire requirement with credits from TZEVs. 

However, IVMs are allowed to fulfill their entire requirement with credits from TZEVs, 

although they may use ZEV credits if desired. Due to these uncertainties, and the 

wide array of ZEVs and TZEVs that could be produced to comply with staff’s proposed

ZEV requirements, staff developed a likely compliance scenario to be used for its 

analyses. 

 35 Confidential information, regarding historical credit usage patterns, was used to determine the effects of 

manufacturer’s banked credits.
47

First, staff made the broad assumption that LVMs would fulfill their obligation with the 

maximum allowed percentage of TZEV credits. This is based on a belief that initial the 

market for TZEVs may be greater than for BEVs due to the latter’s range limitations. 

Most LVMs have announced TZEV demonstration or production programs set to start 

prior to model year 2018. 

Second, staff assumed a combination of BEVs and FCVs would be produced to 

comply with the ZEV requirements. Table 3.3 provides the assumed fraction of the 

total ZEVs produced that would be BEVs or FCVs.

Table 3.3: Fraction of ZEV Technologies 

2018 and Subsequent Model Years

2018 2019 2020 2021 2022 2023 2024 2025 

FCVs 17.5% 18.6% 22.0% 25.0% 29.2% 31.8% 35.4% 40.0%

BEVs 82.5% 81.4% 78.0% 75.0% 70.8% 68.2% 64.6% 60.0%

Staff developed an average weighted credit using the above percentages in Table 3.3

to establish the minimum number of ZEVs produced each year. Each regulated 

manufacturer has a ZEV credit requirement. To translate the number of credits into a 

number of vehicles, a credit per vehicle must be assumed. Staff assumed all FCVs 

produced would have a 350 mile range, earning 4 credits each, and all BEVs 

produced would, on average, have a 100 mile range, earning 1.5 credits each. The 

average weighted credit used each year is enumerated in Table 3.4 below:

Table 3.4: Average Weight Credits Used in Likely Compliance Scenario

2018 2019 2020 2021 2022 2023 2024 2025 and 

beyond

Average 

Weighted 

Credit

1.9 2.0 2.1 2.1 2.2 2.3 2.4 2.5

Using these base assumptions, a number of analyses were run to determine the effect 

of staff’s proposed amendments.

3.3.1 Manufacturer Size Definition Amendments

Staff’s proposed amendments to manufacturer size definitions will affect most IVMs, 

bringing nearly 97% of manufacturers’ vehicle sales in California subject to the full

LVM ZEV requirements. Table 3.5 shows the size classifications for LVMs and IVMs 

under staff’s proposed amendments
48

Table 3.5: Proposed Size Classifications for Manufacturers 2018 and Beyond

LVMs 

(>20,000 CA Sales)

IVMs 

(<20,000 CA Sales –

>4,500 CA Sales)

• BMW

• Chrysler

• Daimler

• Ford

• General Motors

• Honda

• Hyundai

• Kia

• Mazda

• Nissan

• Toyota

• Volkswagen

• Jaguar Land Rover

• Mitsubishi

• Subaru

• Volvo

These size definitions greatly affect the overall number of ZEVs expected to be 

produced in compliance with the ZEV regulations. Additionally, IVMs previously 

allowed to meet their entire requirement with PZEVs will now be allowed to produce 

TZEVs. This is important for setting future standards and ensuring that most 

manufacturers will have some level of electric drive technology in their fleet. In 2025, 

if all IVMs take advantage of the flexibilities provided, over 30 percent of their annual 

sales will be TZEVs. 

3.3.2 ZEV and TZEV Credit Calculations and Increased 2018 and Subsequent 

ZEV requirement

Putting all of the factors and assumptions discussed above together, staff has 

developed the following expected compliance scenario. As a result of staff’s proposal, 

over 1.4 million ZEVs and TZEVs are expected to be produced cumulatively in 

California by 2025, which represents a 200 percent increase over the current ZEV 

requirements. Over 500,000 ZEVs (excluding TZEVs) are expected to be produced 

cumulatively in California by 2025. Figure 9, below, shows the total number of 

vehicles expected to be produced each year in compliance with staff’s proposal. By 

model year 2025, staff expects 15.4 percent of new sales will be ZEVs and TZEVs. 

2.8% of 

California 

Sales

96.9% of 

California 

Sales
49

Figure 9: Expected Compliance for 2018 through 2025 Model Years

The expected numbers for each model year are enumerated in Table 3.6 below. 

These numbers are based on future sales projections from ARB’s Emissions Inventory 

Model, (EMFAC) 201136.

Table 3.6: Number of Vehicles Expected Annually – 2018 through 2025 Model

Year (Expected Compliance Scenario - Rounded to Nearest 100)

2018 2019 2020 2021 2022 2023 2024 2025 Cumulative

TOTAL

FCVs

2,900 6,200 10,600 15,400 21,600 27,800 35,200 43,600 163,300

BEVs

13,900 27,300 37,700 46,300 52,600 59,500 64,200 65,400 366,900

TZEVs

61,300 75,300 89,100 101,900 116,300 131,200 146,900 161,700 883,700

Total 

Vehicles

78,100 108,800 137,400 163,600 190,500 218,500 246,300 270,700 1,413,900

There are an innumerable number of compliance scenarios. As explained above, 

manufacturers are not required to make each technology stated in Table 3.6. LVMs 

 36 ARB 2011b. California Air Resources Board. Emission Inventory Model, EMFAC 2011. 

http://www.arb.ca.gov/msei/msei.htm

 -

 50,000

 100,000

 150,000

 200,000

 250,000

 300,000

2018 2019 2020 2021 2022 2023 2024 2025

Annual California Sales

Model Year

17%

14%

11%

9%

6%

3%

% of 2025 Sales

15.4% of 2025

FCVs

BEVs

TZEVs
50

may fulfill their entire requirement with credits from ZEVs, either BEVs or FCVs, or a 

mixture of both. If LVMs were to only pursue BEV technology to meet their minimum 

ZEV requirement, the number of ZEVs would nearly double each year; if only FCVs

were used to meet their minimum ZEV requirements, the total number of ZEVs would 

be reduced by one third compared to numbers shown in Table 3.6. 

3.3.3 Compliance Flexibility: Use of Banked PZEV and AT PZEV Credits

Staff is proposing to allow manufacturers to use PZEV and AT PZEV credits banked 

up to 2017 model year for 2018 through 2025 model year compliance, even though 

PZEV and AT PZEVs will be removed as compliance options. NEV credits, banked or 

new, would also be under the same cap as banked PZEV and AT PZEV credits. 

Figure 10 shows the amount of the 2018 through 2025 model year ZEV requirements 

that could be met with historical banked PZEV and AT PZEV credits, and NEV credits.

Figure 10: Impact of Banked PZEV AT PZEV Credits, and NEV Credits

(2018 through 2025 Model Years)

If all manufacturers use banked PZEV and AT PZEV credits to the maximum extent 

allowed in 2018 through 2025 model years, they will avoid up to 227,000 TZEVs 

cumulatively. This is about a 25 percent reduction in TZEVs from the values shown 

above in Table 3.6.

 -

 50,000

 100,000

 150,000

 200,000

 250,000

 300,000

2018 2019 2020 2021 2022 2023 2024 2025

Annual California Sales

Model Year

FCVs

BEVs

TZEVs

25% Cap -Banked PZEV and AT PZEV Credits

227,000 TZEVs Avoided Due to 

Banked PZEV and AT PZEV 

Credits and NEV Credits

Reaches 14.4% of 2025 

Sales, instead of 15.4%
51

3.3.4 Compliance Flexibility: GHG-ZEV Over-Compliance Credits

Staff does not know which manufacturers will take advantage of the GHG-ZEV 

over-compliance provisions in model years 2018 through 2021, the only four model 

years these credits will be available. In Figure 11 below, the minimum (if zero 

manufacturers use this option) and maximum (if all manufacturers use this option) 

cases are shown.

Figure 11: Impact of GHG-ZEV Over-Compliance Credits

The hash marked area in Figure 11 represents total ZEV and TZEV sales if

manufacturers responsible for half of vehicle sales take advantage of the GHG-ZEV 

over-compliance provision. The error bars indicate the impact if all manufacturers use 

this provision, or if no manufacturers use this provision. Staff’s best guess at this point 

of time is manufacturers accounting for sales between 15 percent and 50 percent of 

total sales may be able to use the over compliance provision. 

3.4 Effects of Proposed Changes: Travel Provision

Staff is proposing to extend the travel provision for BEVs through 2017 model year. 

This will likely result over 40,000 fewer BEVs placed in the Section 177 ZEV states, 

assuming the volume of vehicles sold in Section 177 ZEV states was twice as much 

as the volume of vehicles sold in California. This provision will be sunset for BEVs 

after 2017 model year. Due to this sunset, there will be a dramatic increase the total 

amount of ZEVs a manufacturer must produce in compliance with California and the 

Section 177 ZEV state regulations. Figure 12, below, shows the likely increase in the 

total number of BEVs placed in compliance with the ZEV regulation in California and in 

the Section 177 ZEV states. 

 -

 20,000

 40,000

 60,000

 80,000

 100,000

 120,000

 140,000

 160,000

 180,000

2018 2019 2020 2021

Total ZEV (BEV, FCV, TZEV) Sales

Total ZEVs and TZEVs

No Manufacturers 

Take Option

All Manufacturers 

Take Option
52

Figure 12: Effect of BEV Travel Provision Sunset in 2017 Model Year

As shown above, the existing regulation requires manufacturers to place more BEVs 

than staff’s proposal during 2015 to 2017 model years. However, due to staff’s 

proposed extension of travel for BEVs, manufacturers are allowed to produce fewer 

BEVs in compliance with the regulation, and required to significantly ramp up their 

volumes in later years. 

During the development of this ISOR, manufacturers and Section 177 ZEV states 

have discussed options regarding amendments to the travel provision. Some states 

have indicated that they would like to have ZEVs in their states prior to model year 

2018, while others continue to prepare for increased volumes starting in 2018. 

Manufacturers have indicated the need for TZEVs to travel, which is not currently 

permitted under the regulation, and is not being proposed. Some manufacturers have

also requested a reduction in the required volumes of ZEVs and TZEVs in the Section 

177 ZEV states in model years 2018 and beyond. At the time of release of this ISOR, 

manufacturers and Section 177 ZEV states were still discussing these various issues. 

 -

 50,000

 100,000

 150,000

 200,000

 250,000

 300,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Proposed: 

Total # ZEVs 

(CA + Section 177 State) Existing: Total # ZEVs 

(CA + Section 177 State)
53

4 REGULATORY ALTERNATIVES

As part of the regulatory development process, staff considered four alternatives

regarding the number of vehicles required to be produced in 2018 and subsequent 

model years. A consistently calculated scenario of expected ZEV and TZEV sales 

used to comply for each of the four alternatives is presented below in Table 4.1. The 

options were then evaluated in the context of two of staff’s primary objectives: 

commercialization of ZEV technology to ensure reduced incremental costs and 

addressing long-term GHG and criteria emission goals. 

Table 4.1: Alternatives – Annual Combined ZEV and TZEVs (Rounded)

2018 2019 2020 2021 2022 2023 2024 2025

Staff 

Proposal 78,000 109,000 137,000 164,000 191,000 218,000 246,000 271,000

Alt A

(Lower) 44,000 56,000 83,000 122,000 157,000 195,000 229,000 261,000

Alt B

(Higher) 120,000 161,000 191,000 218,000 246,000 274,000 302,000 325,000

Alt C*

(Existing 

Program)

54,000 54,000 60,000 60,000 61,000 61,000 62,000 62,000

*Assumes PZEVs and AT PZEVs are removed and covered in LEV III.

4.1 Alternative A: Lower ZEV Requirements

Alternative A combines aspects of a proposal from a subset of auto manufacturers

with staff’s assumptions on amendments to the travel provision. This alternative 

includes a gradual phasing in (reduction) of the ZEV and TZEV credit values,

increasing the fraction of the ZEV requirement that may be met with credits from 

TZEVs, and lower overall requirements.37 Compared to staff’s proposal, the number of 

ZEVs required is much lower in the early years, consists of a much higher portion of 

TZEVs relative to ZEVs, but gets closer to the staff proposal in terms of annual volume 

by 2025. 

Staff rejected Alternative A because it could undercut the launch of and resultant 

commercialization of pure ZEVs (BEVs and FCVs). To achieve full commercialization 

and place the industry on a pathway consistent with meeting long term goals, volume 

sales of ZEVs need to ramp up quickly. Alternative A delays the ramp up. While 

lower numbers of ZEVs would result in lower compliance costs to manufacturers,

progress toward lowering unit costs through increased volume is also delayed, 

pushing out the date at which a sustainable market is reached. Although TZEVs are 

an important bridging technology, too much uncertainty surrounds the availability of 

 37 Manufacturers proposed reducing the number of ZEVs and TZEVs required to be placed in the Section 177 ZEV 

states. Staff modified the manufacturer’s original proposal to reflect a one-third reduction in vehicle requirements in 

California as well as the Section 177 ZEV states for purposes of analyzing Alternative A. 
54

low-carbon biofuels and understanding of how much zero emission VMT is achieved 

with TZEVs to depend fully on TZEVs to achieve long term emission reductions. 

4.2 Alternative B: Higher ZEV Requirements 

Alternative B represents a proposal from a group of non-governmental organizations, 

the California Clean Car Coalition. This alternative is similar to the staff proposal, 

except the jump in volume requirement between 2017 and 2018 is much greater 

(more than a doubling), and requirements for subsequent years are higher by 20 to 50 

percent compared to staff’s proposal. 

Staff rejected this proposal due to the steep jump in volume requirement between the 

model year 2017 and 2018 requirements and increased overall compliance costs. 

4.3 Alternative C: Do Not Amend Program

Staff also considered not recommending any amendments to the ZEV regulation. In 

this case, PZEVs and AT PZEVs would continue to be an option for compliance 

through model year 2018 and require no more than 1.7 percent of manufacturer’s new 

vehicles to be ZEVs in 2018 and subsequent model years. Additionally, 

manufacturers would be required to produce more ZEVs in the Section 177 ZEV 

states, due to the travel provision expiring for Type I, I.5, and II ZEVs (BEVs) following

model year 2014, and expiring for Type III, IV, and V ZEVs (FCVs) following model 

year 2017. Staff rejected this alternative because it is not consistent with achieving a 

commercial market for ZEVs or TZEVs. 
55

5 ECONOMIC IMPACTS

This section discusses the economic impacts of the ZEV requirements on regulated 

manufacturers inside and outside California, individual consumers, and local and State 

government. For the manufacturers, the impact is from higher manufacturing costs, 

which is expressed as an incremental price above a baseline 2016 gasoline vehicle, 

and the total compliance costs (calculated as the sales multiplied by the individual 

incremental prices for any given year). The economic impacts to consumers are 

presented in a variety of ways, including the impact of the incremental price they 

would see when purchasing a ZEV (assuming the manufacturer passes all of the costs 

of compliance to the ZEV compliance vehicles), juxtaposed with the cost savings they 

would recover when operating the vehicle, the incremental costs to all vehicles if the 

compliance costs of the ZEV program were spread across the entire new vehicle fleet 

and a discussion of other factors influencing the price of ZEVs in the marketplace. For 

local and State government, impacts are presented qualitatively. 

5.1 Legal Requirement 

Sections 11346.3 and 11346.5 of the Government Code require state agencies to 

assess the potential for adverse economic impacts on California business enterprises 

and individuals when proposing to adopt or amend any administrative regulation. The 

assessment shall include consideration of the impact of the proposed regulation on 

California jobs, business expansion, elimination, or creation, and the ability of 

California businesses to compete. State agencies are also required to estimate the 

cost or savings to any state or local agency and school districts in accordance with 

instruction adopted by the Department of Finance. This estimate is to include any 

nondiscretionary costs or savings to local agencies and the costs or savings in federal 

funding to the state. 

5.2 Directly Affected Businesses 

At present, there are no companies in California whose sales volumes are high 

enough for them to be considered IVMs to make them subject to the existing ZEV 

requirements or the proposed amendments. There are three California-based 

businesses that could be subject to this regulation in the future. Three motor vehicle 

manufacturing plants are located in California: a Fremont facility and Palo Alto facility 

owned by Tesla Motor Company, and an assembly facility in Benicia owned by Coda. 

Due to staff’s proposed amendment to count ZEVs in a manufacturer’s applicable 

sales volume (as discussed in section 2.2.10, above), these three California 

manufacturers could become subject to the ZEV regulation if their individual California 

sales volume each exceed 4,500 vehicles per year. 

Outside of California, LVMs and IVMs subject to the ZEV regulation are directly 

affected by the proposed amendments. As described in Section 2.2.1, nearly all 

manufacturers are required to comply with the current ZEV regulation. The largest six 

vehicle manufacturers, which account for nearly 80 percent of California’s LDV 
56

market, are currently required to make ZEVs, which results in a greater economic 

impact. The eight IVMs are allowed to comply with PZEVs, which are nearer to 

conventional technology, and are usually less financially impacted. However, due to 

staff’s proposed amendments which redefine the size of the IVM and LVMs (discussed 

in Section 2.2.1), it is projected that 12 manufacturers, accounting for approximately 

97 percent of all LDV PC and LDT sales, will be directly regulated to make ZEVs 

starting in 2018 model year.

 

5.2.1 Potential Impact on Manufacturers

Manufacturers may take many different paths to comply with the ZEV regulation. In 

general, as a result of staff’s proposed amendments, regulated manufacturers are 

likely to adjust their future vehicle product portfolios and accelerate development and 

production of advanced technology vehicles. This will have a direct impact on 

research, development, and production programs, and a secondary impact on the 

suppliers of components and infrastructure. A manufacturer’s involvement in 

advanced technologies for global markets and the manufacturer’s quantity of banked 

ZEV credits, will also affect the impact from the regulation. The impact of the 

proposed amendments will affect manufacturers differently depending on the size of 

their California sales, company resources, and technology expertise. 

Technology Choice

In general, manufacturers with larger market shares, like Toyota and General Motors, 

sell a larger variety of cars and trucks. Though staff predicts most ZEVs and TZEVs 

will be primarily PCs, manufacturers’ compliance strategies for the ZEV regulation 

may take into account a specific technology best suited for varying platform sizes. For 

example, manufacturers with a broad mix of cars and trucks may pursue multiple 

technologies to apply across their varied platforms. However, manufacturers with 

fewer and more consistent platforms may pursue a single technology that applies well 

to their model mix. Examples of platform specific considerations for the various 

technologies follow: 

• BEVs may predominantly be on small car platforms given the relationship 

between vehicle weight, range and cost associated with batteries. Namely, to 

minimize cost and maximize range, batteries are applied to the smallest or 

lightest vehicles. Additionally, smaller platforms are a better match with 

vehicles limited to 100 to 150 miles electric range that may be predominantly 

used in urban areas.

• FCVs may predominantly be on mid-sized car and light truck platforms given 

their longer-range performance and the capability to scale up powertrain output 

with less additional weight compared to batteries (adding range is a function of 

adding hydrogen storage capacity which can be done more cost effectively than 

adding batteries on a BEV in larger vehicle platforms).
57

• PHEVs may be developed on a wide range of platforms depending on the size 

of the battery used. The more battery dominant the drive-train, the smaller the 

platform that will likely be used.

5.2.2 Incremental Direct Manufacturing System Costs Estimates

For manufacturers, incremental cost represents the added cost to manufacture 

advanced vehicle components and higher material costs (e.g. lithium for batteries and 

platinum for fuel cells). In some cases, specific advanced vehicles are more complex 

than conventional cars (e.g. PHEVs have both combustion engines and batteries). 

Determining incremental costs is important to evaluate the impact to manufacturers 

when coupled with total sales. 

For this analysis, staff estimated incremental direct manufacturing system costs for 

each model year of the regulation and compared them to a 2008 baseline gasoline 

vehicle.38 Model year 2008 is used as a technology reference for the GHG-reduction 

effectiveness calculations because it is the year with the most comprehensive dataset 

(e.g., for sales, footprint, technology, CO2 emissions for every model), and it closely 

matches the vehicle simulation modeling baseline. As a result, incremental 

technology costs are also indexed to the 2008 technology level. Subsequent 

calculations of incremental compliance costs for new proposed regulations are relative 

to the technology required to comply with existing regulations, including model year 

2016 GHG standards. A description of cost impacts for each technology follows: 

Plug-in Hybrid Electric Vehicles 

The variation in the incremental costs for PHEVs between vehicle classes is smaller 

than the BEV technology given the smaller battery pack size. However, PHEVs will 

remain inherently more complex than BEVs because of the combustion engine.

Battery Electric Vehicles

The incremental costs are particularly sensitive to the vehicle’s electric range given its 

direct relationship to the size of the battery pack. 

Fuel Cell Vehicles

FCVs are expected to have higher incremental costs when first introduced into the 

market compared to BEVs, but will decline rapidly with production volumes (2012 vs. 

2025 system costs shown in Table 5.1). 

The most expensive components of ZEVs are the battery modules and fuel cell 

systems. To better understand the declining costs of these advanced components, 

Table 5.1, below shows the direct manufacturing costs of the battery packs and fuel 

 38 As described in the LEVIII ISOR, staff developed a comprehensive model for projecting the incremental costs of 

advanced vehicle technologies in future years. This modeling effort was conducted jointly with the U.S. EPA and 

NHTSA in support of the Federal rulemaking, and was first presented in the Technical Assessment Report (EPA, 

2010). This analysis was revised in 2011 and is outlined in the LEVIII ISOR Section III-A-4.3. 
58

cell systems39 for midsized platforms. Because, as shown in the table below, 

incremental system costs decrease with increased volume, staff’s proposal will have 

the effect of decreasing per vehicle direct manufacturing system costs as compared to 

the existing requirements. Incremental system costs are shown for multiple years 

between 2012 and 2025, revealing the declining cost of batteries and fuel cells over 

time as production volumes rise. 

Table 5.1: Incremental Direct System Manufacturing Costs* (2009$)

2012 2015 2020 2025

System per-vehicle costs ($)a

PHEV20 battery pack 8,078 6,462 3,309 2,647

BEV100 battery pack 21,367 17,094 8,752 7,002

FCV fuel cell system 18,908 10,208 5,220 4,756

System per-unit costs

PHEV20 battery pack ($/kWh) 1053 842 431 345

BEV100 battery pack ($/kWh) 605 484 248 198

FCV fuel cell system ($/kW) 163 88 45 41

*Based on midsize car / small multipurpose vehicle class, as compared to a 2008 baseline; Figures 3 and 

4, in Section 2.2.3, show the system costs graphically.

Battery packs and fuel cell stacks are assumed to last the life of the vehicle (no 

replacement). As compared to BEVs where the system cost is predominantly the 

battery pack, FCVs include three major sub-systems in addition to the electric drive 

components shared by both technologies. The three sub-systems include the fuel cell 

system (fuel cell stack and auxiliary equipment), the hydrogen storage assembly, and 

the hybrid battery pack (similar size to existing conventional hybrids).

The table above shows that incremental system costs decline with volume production 

– an important reason that the ZEV requirements ramp up through the program years. 

It is also important to point out that the incremental system costs of FCVs drop below 

the incremental system costs of BEVs in the later years of the program. This factor 

was used in the staff’s estimates of vehicle technology mix in the expected compliance 

scenario. 

5.2.3 Vehicle Package Incremental Prices

To determine the total impact to manufacturers, staff analyzed incremental vehicle 

prices for each ZEV technology. Incremental vehicle prices include the direct 

manufacturer costs, as shown above, as well as an indirect cost multiplier (ICM). As 

described the LEVIII ISOR Section III-A-4.3, the ICM markup includes a number of 

indirect cost components, including overhead, warranty, RD&D, depreciation, 

marketing, and dealer profit. Table 5.2 below shows the ICM values used in the full 

ACC analysis. The “High 2” complexity category was used for the BEV and PHEV

platforms, whereas “High 1” was used for FCV platforms (and non-battery components 

for PHEVs). 

 39 These costs differ from those in Table 6.1 as they do not include all other package components such as electric 

motors, power electronics, or small combustion engines for PHEVs, and are compared to a 2008 baseline rather 

than a 2016 baseline vehicle. 
59

Table 5.2: (Un-Modified) Indirect Cost Multipliers 

Tech Complexity Level Near term (2017-2021) Long term (2022-2025)

High 1 1.56 1.35

High 2 1.77 1.50

Note: ICM factors shown are approximate; mark-up factors involve separate components for 

warranty and non-warranty related indirect costs

These ICM factors for advanced vehicles are conservative estimates about how these 

advanced technology cost factors (by battery and fuel cell stack developers, in-house 

or at supplier companies) may ultimately affect automakers’ indirect costs. Hereafter, 

the ICM values in Table 5.2, above, will be referred to as “un-modified ICMs”.

For comparison, an alternate ICM value of 1.33 (modified ICM) was also analyzed to 

represent the scenario where the auto industry better manages the associated 

complexity and indirect costs associated with the emerging advanced technologies. 

Staff believes that this lower ICM is of higher likelihood as ZEVs are commercialized 

and automakers work in-house and with suppliers to minimize the cost factors inherent 

to the ICM framework. The National Academy of Sciences (NAS) similarly suggests 

lower ICM values in its 2011 technology assessment for hybrid and plug-in vehicles 

due to the likelihood that many of the indirect costs (e.g., engineering, labor, 

overhead, and integration costs) would otherwise be double counted. 40 

Table 5.3 below, shows the sensitivity of incremental vehicle prices to the ICM 

assumption. All values are referenced to a MY2016 average baseline technology.

Table 5.3: ICM Sensitivity Analysis of Incremental Vehicle Price

Un-Modified ICM Modified ICM

2020 2025 2020 2025

PHEV20 (6.6 kWh) 10,249 8,448 7,969 7,312

BEV100 (30 kWh) 14,593 10,829 11,428 9,406

FCV (3.3 kg H2) 9,811 7,513 8,224 7,387

All technologies on subcompact platforms. 

As shown, the use of a 1.33 ICM factor would bring down BEV and PHEV costs by 

$1000 to $3000 per vehicle; the lower ICM would reduce FCV costs by $200 to $1500. 

Staff believes that the 1.33 is likely to be a maximum ICM for the cost multiplier for the 

indirect costs of conventional hybrids and PHEVs and that BEV technology is likely to 

have a lower cost multiplier (though higher gross per-vehicle indirect cost) due their 

reduced OEM integration complexity (i.e., without combustion engine and associated 

integration issues). Nonetheless, the un-modified, more conservative ICMs were 

utilized for consistency with the LEV III analysis (and related joint-agency technology 

cost analysis).

Table 5.4, below, shows incremental ZEV technology prices for model years 2016 and 

2025. Model year 2016 was chosen as the reference vehicle technology for this 

 40 NAS, 2011. National Academy of Sciences. 2010. Committee on the Assessment of Technologies for 

Improving Light-Duty Vehicle Fuel Economy; National Research Council “Assessment of Fuel Economy 

Technologies Light Duty Vehicles”. 
60

analysis, as it is the final model year of the currently adopted GHG regulations.41 So 

for example, for the 2025 model year comparison, a 2025 model year vehicle with 

2016 technology was compared with a 2025 model year vehicle equipped with 

technology necessary for meeting the new proposed standards in 2025. 

Table 5.4: Incremental technology package prices above average MY2016 

baseline technology (2009$)1

Vehicle Class

Technology 

Package

(energy capacity) 2

Incremental 

Vehicle Price in 

2016

Incremental 

Vehicle Price in 

2025

Subcompact PHEV20 3 (6.6 kWh) 13,233 8,448

PHEV40 (13.4 kWh) 16,580 10,259

BEV75 4 (23 kWh) 17,010 9,405

BEV100 (30 kWh) 19,655 10,829

FCV 5 (3.3 kg H2) 19,060 7,513

Midsize car / 

Small MPV

PHEV20 (7.7 kWh) 13,807 8,876

PHEV40 (15.5 kWh) 17,818 11,043

BEV75 (27 kWh) 17,562 9,794

BEV100 (35 kWh) 20,785 11,551

FCV (3.8 kg H2) 23,472 9,334

Large Car PHEV20 (9.1 kWh) 17,280 11,205

PHEV40 (18.7 kWh) 23,134 14,390

BEV75 (30 kWh) 20,820 11,628

BEV100 (40 kWh) 23,959 13,363

FCV (4.3 kg H2) 33,238 13,406 1 Refer to the LEVIII ISOR Section III-A-4.3 and Appendix R for additional vehicle packages 2 Energy capacity for BEV/PHEV is kWh rated battery pack capacity, kg H2 for FCV 3 EPA and NHTSA designation for a PHEV is a “range extended electric vehicle” or REEV. 4 For BEVs and PHEVs, the residential charging equipment costs are included in these technology packages. 

5 FCV costs include the fuel cell system (as shown in later figures), the hydrogen storage system, the hybrid battery 

module, and other EV components and power electronics similar to the BEV technology package.

5.2.4 Component Costs and Baseline Comparisons

Figures 13 and 14, below, show the individual component costs of BEVs and FCVs, 

along with the ICM, above reference 2016 model year technology. The figures show 

the break-out for various components within the vehicle, displaying the relative 

difference in cost between individual parts and the projected cost reduction from 

learning effects between 2020 and 2025. Several gasoline vehicle reference points 

are shown for context. Note that these two figures show a baseline 2008 powertrain 

(i.e., engine and transmission) at $2500, and a model year 2016 vehicle would 

represent about $1000 per vehicle in additional cost. Also note that several of the 

BEV and FCV components that are shown (aerodynamics, low rolling resistance tires, 

improved accessories) in the figures are also likely to be deployed widespread on 

future gasoline vehicles. As described in Section 5, the battery costs are the dominant 

 41 Staff notes that model year 2008 is the technology level from which vehicle attributes are well characterized and 

is the fundamental reference for technology, cost, and emission-reduction effectiveness in ARB staff's joint work 

with the federal agencies on LEV III assessment. The average projected incremental price for model year 2016 

non-ZEV vehicle modifications related to the LEVIII GHG program is $951 per vehicle over the model year 2008 

reference. 
61

factor for BEVs, and the fuel cell system coupled with the hydrogen storage assembly 

dominate the costs for FCVs.

Figure 13: BEV Component Costs and ICE Comparisons (2009$) *

*Component costs reflect subcompact 100 mile BEV

Figure 14: FCV Component Costs and ICE Comparisons (2009$)*

*Component costs reflect mid-size 350 mile FCV
62

5.2.5 Annual Manufacturer Costs

For manufacturers, an annual compliance cost is calculated by multiplying the total 

advanced vehicles required due to staff’s proposal by the incremental prices for each 

vehicle type and size. Due to staff’s proposal to increase the 2018 and subsequent 

model year ZEV requirement, regulated manufacturers will experience an increase in 

compliance costs as compared to current ZEV requirements. Table 5.5 shows the 

annual impact to manufacturers (for two model years: 2020 and 2025) due to staff’s 

proposed changes, and the difference in impact as compared to the existing 

regulation. 

The compliance costs in Table 5.5, below, include the un-modified ICM mark-up. It 

was important to directly capture all of these cost components in the estimated 

compliance cost. The small fraction associated with assumed profit would represent 

future expenditures on required RD&D or costs to supplier systems.

Table 5.5: Estimated Annual Compliance Costs for 2020 and 2025* (2009$)

2020 2025

Sales -

Rounded

(vehicles)

Average

Incremental 

Vehicle Price

Total Cost 

(millions)

Sales –

Rounded 

(vehicles)

Average

Incremental 

Vehicle Price

Total Cost 

(millions)

Staff Proposal

BEV 39,000 12,900 $502 65,000 9,500 $618

FCV 11,000 12,400 $136 44,000 9,300 $411

PHEV 93,000 10,900 $1,017 164,000 8,900 $1,465

Total 143,000 11,600 $1,655 272,000 9,200 $2,494

Existing Regulation

BEV 22,000 13,000 $287 16,997 9,700 $164

FCV 6,000 10,800 $65 11,331 8,000 $90

PHEV 35,000 10,400 $363 33,993 8,700 $295

Total 63,000 11,400 $715 62,321 8,800 $550

Total Incremental Costs $940 $1,983

* Costs are based on incremental ZEV technology vehicle prices above non-ZEV model year 2016 technology

The incremental costs in Table 5.5 above represent an average of incremental prices 

amongst various platforms, found in Table 5.4. Lower incremental costs in the 

“Existing Regulation” case are due to lower volumes being assumed on smaller 

platforms with lower incremental prices. The higher volumes required by staff’s 

proposal result in ZEV technologies moving into larger platforms, and therefore have a 

higher incremental price per vehicle. 

Staff estimates the entire incremental compliance cost for the ZEV proposal alone, 

above the existing regulation for the years 2018-2025, to be approximately $10.5

billion. However, subsection 5.2.6 will discuss the cost of the proposed amendments 

to the ZEV regulation in context with compliance with LEV III fleet average standards. 

5.2.6 Incremental Price Increase in the Context of Advanced Clean Cars

The ZEV regulation must be considered in conjunction with the proposed LEV III 

amendments. Vehicles produced as a result of the ZEV regulation are part of a 
63

manufacturer’s light-duty fleet and are therefore included when calculating fleet 

averages for compliance with the LEV III GHG amendments. Because the ZEVs have 

ultra-low GHG emission levels that are far lower than non-ZEV technology, they are a 

critical component of automakers’ LEV III GHG standard compliance strategies. As 

such the ZEV program cost is considered as the difference in complying with the LEV

III GHG fleet standard without the proposed amendments to the ZEV regulation versus 

with the proposed amendments to the ZEV regulation. 

Assuming that all of the associated direct manufacturing and ICMs are passed on to 

consumers, the average incremental price increase that results from the proposed 

LEV III GHG fleet standards and proposed ZEV regulation over the 2017 through 2025 

timeframe will differ from the average increase resulting from compliance with only the 

LEV III GHG amendments. The average incremental vehicle price due to proposed 

LEV III GHG standards, but with no amendments to the current ZEV regulation, in 

2025 is expected to be $1,340. The average incremental vehicle price considering 

the proposed LEV III GHG fleet standards and the proposed ZEV requirements in 

2025 model year increases to $1,840, a $500 incremental increase. Using the 

modified ICM, the incremental price increase due to the proposed ZEV requirements 

would by $370 instead of $500. Figure 15 below shows the incremental vehicle 

prices, with and without staff’s proposed amendments to the ZEV regulation. In the 

broader context of the overall fleet, the ultra-low GHG ZEV technology is a major 

component of compliance with the LEV III GHG fleet standards for the overall light 

duty fleet. In that fleet context, the overall cost of the ZEV program is the difference in 

costs between the “GHG-plus-ZEV” and the “GHG only” scenarios.

Figure 15: Incremental Vehicle Price (With and Without* ZEV Proposal)

*Proposed 2025 GHG Standards means 2025 GHG standards with no change to the current ZEV requirements.

Table 5.6 summarizes the total incremental cumulative cost of the ZEV program in two 

different contexts. First, the incremental cost of the expected deployment of ZEV

technology is summed versus the reference model year 2025 as if the current 
64

requirements for the ZEV regulation remained unchanged. This cumulative ZEV 

incremental technology cost is equivalent to $10.5 billion over 2018 through 2025 

model years. In the second context, the amended ZEV program vehicle cost is 

compared in combination with compliance with the LEV III amendments. As illustrated 

above in Figure 15, the difference between LEV III GHG with the existing ZEV 

regulation and GHG with the proposed ZEV regulation in each model year (times the 

number of total vehicles sales) is the equivalent cost premium of the ZEV program. In 

this overall fleet context where the ZEV technology produces substantial GHG 

reductions in the LEV III program, the additional cost of the amended ZEV program is 

$4.6 billion over 2018-2025 model years.

Table 5.6: Estimated Compliance Costs for ZEV regulation in two contexts

Program cost, 

MY2018-2025

ZEV technology - Incremental compliance cost from proposed ZEV 

amendments to current ZEV program $10.5 billion

Incremental compliance - Incremental cost to comply with GHG 

program with new ZEV program (versus without new ZEV program) 

through each model year

$4.6 billion

5.3 Potential Impacts to Individuals (Car Buyers)

For individual consumers, incremental price represents the added price they would 

pay for a ZEV compliant car over a baseline vehicle, creating a higher “initial” or “up 

front” cost. For this analysis, staff estimated incremental prices for each model year of 

the regulation and compared them to 2016 baseline vehicle technology. Determining 

incremental prices is important to evaluate the potential upper bounds impact to 

individual consumers, and is later coupled with operating cost savings to determine 

payback periods.

Staff’s proposed amendments will likely decrease the per-vehicle initial cost to 

consumers compared to the existing regulation because of the impact of higher 

production volume reducing incremental costs, but costs will remain $7,500 to $14,500 

higher than the 2016 vehicle technology in 2025. The incremental price per vehicle 

can be found in subsection 5.2.3 above. 

5.3.1 Lifetime Costs and Consumer Payback42

With significant changes in technology and in alternative fuels, car buyers have the 

opportunity to think about the cost of their personal transportation choices differently 

by considering both initial purchase prices and in-use costs such as fuel, maintenance 

and other factors. As shown below in Table 5.743, ZEVs’ incremental price increase is 

paid back over the life of the car. Table 5.7 below outlines the lifetime costs and 

consumer savings resulting from staff’s proposed amendments. Lifetime costs include 

varying fuel costs due to improved efficiency and using an alternative fuel, electric 

 42 See Appendix C for cost inputs and assumptions. 43 A further explanation on lifetime costs can be found in the LEVIII ISOR Section III-A-4.4.
65

charging equipment purchases, and vehicle and equipment purchase incentives. The 

table shows the incremental prices for vehicles purchased in 2025 and then shows 

lifetime consumer savings.

Table 5.7: Lifetime Costs and Consumer Paybacka (2009$)

Technology Packageb Incremental 

Vehicle Price in 

2025c

Lifetime 

Consumer 

Savingsd

PHEV20 (7.7 kWh) 8,876 10,382

PHEV40 (15.5 kWh) 11,043 10,565

BEV75 (27 kWh) 9,794 10,594

BEV100 (35 kWh) 11,551 10,594

FCV (3.8 kg H2) 9,334 6,067 a Costs based on incremental vehicle prices above a 2016 baseline technology b Based on mid-size car / small multipurpose vehicle c Vehicle prices, including residential charging equipment/installation costs for plug-in vehicles

d Average car lifetime in California is 14 years, 186,000 miles; Future fuel savings discounted by 5%.

Fuel prices from CEC (e.g., for 2025, gasoline = $4.02/gal); electricity = $0.15/kWh; Hydrogen = $6/kg

ARB estimates the median life in California for PCs is 14 years, or approximately 

186,000 miles. For two vehicle types shown, the consumer payback occurs within the

median life of the vehicle. The “consumer payback period” is the year at which the 

cumulative fuel savings equals the incremental purchase price. Though the payback 

period will not occur within the life of the vehicle for the three other vehicle types, 

consumers will still experience $6,000 to $10,000 in lifetime savings. Note that these 

savings are based on average annual VMT; to the extent that consumers travel more 

or less than average or own their vehicles for longer or shorter than the median life, 

savings could be higher or lower. 

As discussed further in this subsection 5.2.4, manufacturers may also spread some or 

all of the compliance cost of ZEVs across their whole vehicle fleet, which would 

reduce the incremental cost per ZEV vehicle, as well as the consumer payback period. 

The LEV III ISOR shows when costs for LEV and ZEV compliance are considered in a 

join context, the average payback period is 3 years for model year 2025 vehicles. 

Other factors that impact the actual cost of ZEVs to consumers are discussed below in 

subsection 5.3.2.

5.3.2 Other Cost Factors 

This section has so far laid out the incremental price of ZEVs compared to 

conventional cars as well as the incremental impact of the ZEV amendments in the 

context of the entire ACC program. But there are other factors that may influence the 

price, operating cost savings and operational benefits of ZEVs. Some of these are 

discussed below.

These additional economic factors are not quantified as a part of staff’s analysis of the 

proposed amendments, but can be evaluated at a future time when they are better 

understood.

• International Factors: If a manufacturer is developing ZEVs for other markets 

outside of the United States, it will be better prepared to meet staff's proposed 
66

ZEV requirements in 2018 and subsequent model years. Coupled with the 

production plans for BEVs and PHEVs from manufacturers, substantial 

international investments are being made into advanced battery production and 

development. These trends are outlined in several studies, including Roland 

Berger44,45 and the International Energy Agency’s recent EV Roadmap46. As 

global markets grow, the production capacity is growing rapidly which helps to 

bring costs down. 

National government support for battery manufacturing, vehicle development, 

and incentives are also influential factors in international market costs (e.g. 

China, Japan, United States).47 The European Union (EU), particularly France 

and Germany, have strong policies and incentives supporting FCVs, BEVs, and 

PHEVs. China has substantial vehicle incentives, infrastructure funding, and 

manufacturing subsidies in place. South Korea has national support for 

hydrogen infrastructure. Japan has infrastructure support for both electricity 

and hydrogen. In addition to centralized financial support, national emission 

regulation targets will also influence advanced vehicle programs. The EU, 

China, and Japan all have aggressive gCO2/kilometer targets for the 2020-

2025 timeframe.48 

• Vehicle Maintenance – Although BEVs and FCVs still have some moving parts, 

the number of components and fluids that need to be serviced is likely to be 

lower than conventional vehicles. Although this is difficult to estimate today, it 

is expected that BEVs and FCVs will have lower maintenance costs over the 

life of the vehicles. As an example, Ford has recently stated that maintenance 

costs of its upcoming Focus BEV could be $1,200 lower than the conventional 

Focus over 10 years.49

• Low Carbon Fuel Standard (LCFS) credit value – Depending on policy 

decisions by ARB and the California Public Utilities Commission (CPUC), LCFS 

credit value for electricity may be returned to electricity providers and ultimately 

ZEV drivers. A recent research study identified the potential revenue this would 

provide for BEV users. With California’s 2020 grid, the value could range from 

$75 per vehicle per year (at $25 per tonne CO2 equivalent) to $300 per vehicle 

 44 Roland Berger, 2010a. Roland Berger Strategy Consultants “Powertrain 2020: Li-Ion Batteries – The Next 

Bubble Ahead” 45 Roland Berger, 2011. Roland Berger Strategy Consultants. “Automotive Landscape 2025: Opportunities and 

Challenges Ahead”

46 IEA, 2011. International Energy Agency, June 2011. “Technology Roadmap – Electric and Plug-in Hybrid 

Electric Vehicles”

47 PRTM, 2011. PRTM and World Bank, April 2011 “The China New Energy Vehicles Program – Challenges and 

Opportunities” 

48 ICCT, 2011. International Council on Clean Transportation, April 2011 Update. “Global Light-Duty Vehicles: Fuel 

Economy and Greenhouse Gas Emissions Standards” 49 PluginCars, 2011. PluginCars.com. Zach McDonald. February 9, 2011. “Ford Pushes Key Marketing Message: 

Lower Maintenance Costs.” http://www.plugincars.com/ford-pushes-key-marketing-message-electric-cars-lowermaintenance-costs-106793.html Accessed September 26, 2011.
67

per year (at $100 per tonne CO2 equivalent).50 This could result in a fueling 

rebate, or discount on electricity rates for PHEVs and BEVs.

• Fuel tax change – The current state and national gasoline taxes are no longer 

sufficient as the LDV fleet becomes more efficient and as alternative fuels are 

introduced. Several national studies have identified the scale of the funding 

gap and potential solutions Congress could consider.51,52 This may change into 

a VMT-based tax, which would treat all fuels equally, or may become an 

energy-based tax which would favor alternative fuels with lower WTW energy 

usage. Currently, hydrogen and electricity for transportation do not pay road 

taxes, though their contribution to the funding shortfall is small.

• Feebates – A revenue neutral feebate policy on new vehicles would increase 

purchase costs for vehicles with higher carbon emissions while reducing costs 

for vehicles with lower carbon emissions. A recent study prepared for ARB

analyzed a California specific feebate policy and the potential benefits and 

challenges.53 As financial purchase incentives are discontinued in the next few 

years, a feebate policy could create a permanent cost offset for efficient 

advanced vehicles without relying on government funds.

• Battery grid services - For BEVs and PHEVs, there may be additional revenue 

opportunities in the future for battery second-life usage54,55 and vehicle-to-grid 

services. However, these factors are speculative at this point and would 

require a number of barriers to be addressed. California stakeholders, such as 

the CEC, CPUC, and Electric Power Research Institute (EPRI), are studying 

these concepts.

• Non-Monetary Factors affecting Purchase Behavior – It is important to note that 

initial purchase price, lifetime costs, and payback estimations are not the 

dominant factors to all buyers; a certain fraction of consumers will consider 

non-monetary factors when purchasing their vehicle. The convenience of 

charging a vehicle at home and work, the synergies of integrating vehicles with 

the electric grid, the attractiveness of electric drive characteristics (reduced 

noise, low speed torque from FCVs and BEVs), energy security benefits 

(reduced oil consumption), making a “green” purchasing decision (reducing 

emissions), access to high-occupancy vehicle lanes, and even the ability to 

 50 UC Davis, 2011a. University of California, Davis. Chris Yang. June 23, 2011. “Fuel Electricity and Plug-in 

Electric Vehicles in an LCFS.”

51 Carnegie, 2011. Carnegie Endowment, 2011. “Road To Recovery – Transforming America’s Transportation”

http://carnegieendowment.org/files/road_to_recovery.pdf 52 Greene, 2011. David Greene, Transportation Research Part D, 2011. “What is greener than a VMT tax? The 

case for an indexed energy user fee to finance U.S. surface transportation” 53 UC Davis, 2011b. University of California, Davis. D. Bunch and D. Greene, February 2011. “Potential Design, 

Implementation, and Benefits of a Feebate Program for New Passenger Vehicles in California: Final Report.”

54 NREL, 2011b. National Renewable Energy Laboratory. J. Neubauer and A. Pesaran. June 2011. “The ability of 

battery second use strategies to impact plug-in electric vehicle prices and serve utility energy storage applications.” 55 UC Berkeley, 2011. University of California, Berkeley. B.Williams and T.Lipman. April 2011. “ Analysis of the 

combined vehicle and post vehicle use value of lithium ion plug-in vehicle propulsion batteries.” (Draft Final)
68

directly connect renewable power to BEVs and PHEVs at home may influence 

the value customers consider in purchasing these vehicles. 56,57

5.4 Potential Impact on Business Competitiveness 

Automobile manufacturing in California represents a small fraction of the State’s 

economy, less than 0.5 percent. The California businesses impacted by this 

regulation are largely indirectly affected as affiliated businesses such as gasoline 

service stations, automobile dealers, and automobile repair shops. Affiliated 

businesses are mostly local businesses. These businesses compete within the State 

and generally are not subject to competition from out-of-state businesses. Therefore, 

the proposed regulations are not expected to impose significant competitive 

disadvantages on affiliated businesses. 

5.5 Potential Impact on Business Creation, Elimination or Expansion

California businesses that purchase the same LDVs as consumers would, like 

consumers, pay higher prices for the vehicles but save on operating costs, as is 

discussed in Section 5.3 above. 

It is very likely that savings from reduced vehicle operating costs would end up as 

expenditures for other goods and services. These expenditures would flow through 

the economy, causing expansion or creation of new businesses in several sectors. 

Staff's economic analysis shows that as the expenditures occur, jobs and personal 

income increase. As discussed in the LEV III ISOR, the Environmental Revenue 

Dynamic Assessment Model (E-DRAM) was used to assess the overall impact of the 

regulation on California’s economy. Specifically, E-DRAM was used to estimate 

impacts on California's output of goods and services, personal income, and 

employment. In the analysis for the full ACC program which includes the proposed 

amendments to the ZEV regulation, jobs increase by 0.1 percent in 2025, and 0.2 

percent in 2030 compared to the baseline economy that excludes the proposed ACC 

program. Similarly, personal income grows by $1 billion in 2020, by $3 billion in 2025, 

and $6 billion 2030. The estimates of the regulation's impact on these economic 

factors are used to assess the potential impacts on business creation, elimination, or 

expansion in California. 

Staff’s proposed amendments will likely increase benefits to companies specializing in 

ZEVs and ZEV infrastructure. The creation of these businesses cannot be fully 

attributed to staff’s proposed amendments. Business and job creation from advanced 

vehicle technologies is part of the clean technology sector, which is currently 

experiencing higher than average job growth in California and nationally.58 However, 

 56 UC Davis, 2010. University of California, Davis. J.Axsen and K.Kurani. July 2010. “Reflexive Layers of 

Influence (RFI): A model of social influence, vehicle purchase behavior, and pro-societal values.” 57 UC Davis, 2011c. University of California, Davis. T.Turrentine et al. Mary 2011. “The UC Davis MINI E 

Consumer Study.” 58 Brookings, 2011. The Brookings Institution. M. Muro, J. Rothwell, and D. Saha. “Sizing the Clean Economy: A 

National and Regional Green Jobs Report”
69

staff’s proposal will likely increase opportunities for California-based manufacturers to 

generate credits through production of ZEVs and TZEVs to increase flexibility for 

regulated manufacturers who may purchase credits for ZEV regulation compliance. 

Some specific sectors are discussed below.

5.5.1 Manufacturing

Staff’s proposed amendments will require increased manufacturing of ZEV and PHEV 

componentry. There is very little vehicle component and final assembly in California, 

most of it occurring in other parts of the United States and internationally. However, 

as the ZEV amendments are expected to increase demand for these components and 

vehicles, these businesses would likely expand, which could offset any reductions 

experienced in the conventional vehicle segment.

In California, smaller manufacturers not currently mandated to build ZEVs under the 

regulation do have plans to increase ZEV and ZEV component production. One 

vehicle assembly plant in the state, formerly a joint venture between General Motors 

and Toyota that produced conventional vehicles, was recently purchased by Tesla, a 

California company developing BEVs. Tesla intends to use the facility to manufacture 

the Model S BEV due to arrive on the market in mid-2012. At one time, the Fremont 

facility employed approximately 4,000 people. Under Tesla’s plans, it may employ 

nearly 1,000 people. Coda Automotive, another California BEV company has 

announced plans to assemble vehicles in Benicia, California.59 

5.5.2 Infrastructure 

Staff’s proposed amendments will increase demand for fueling infrastructure in 

California. There are several California-based companies developing electric vehicle 

charging equipment, including Coulomb, AeroVironment, Better Place, Clipper Creek,

and 350Green. Additional non-California based electric vehicle supply equipment 

(EVSE) providers are installing equipment in the state to support the growing BEV and 

PHEV markets – including ECOtality, Leviton, and General Electric. Many of these 

companies are leveraging external grants, for example U.S. DOE awards, and 

marketing and installing chargers in California.60 

Several major companies are entering the EVSE market and using traditional large 

retail outlets. General Electric is planning to distribute its EVSE, the WattStation, 

through Lowes home improvement stores.61 Ford and its EVSE supplier, Leviton, are 

partnering with Best Buy and its Geek Squad for retail and distribution of their 

equipment to homes.62 Over time, it is expected that partnerships will grow and 

innovative business models will emerge for servicing and installing EVSE.

 59 BusinessTimes, 2011. San Francisco Business Times, September 12, 2011. “Coda to assemble electric cars in 

Benicia” http://www.bizjournals.com/sanfrancisco/news/2011/09/12/coda-to-assemble-evs-in-benicia.html 60 Coulomb, 2011. Coulomb ChargePoint America. Website. http://chargepointamerica.com/. Accessed 

September 20, 2011

61 Green Car Congress, 2011a. Green Car Congress.com, July 18, 201.1 “GE Energy partners with Lowe’s to 

provide EV chargers for home and commercial use; Siemens Energy providing chargers to Town of Cary, NC” 

http://www.greencarcongress.com/2011/07/gesiemens-20110718.html Accessed September 9, 2011. 62 Green Car Congress, 2011b. Green Car Congress.com, January 13, 2011 “Ford developed home charging 

station for the Focus with Leviton” http://www.greencarcongress.com/2011/01/ford-20110113.html
70

Staff’s proposal will also create a demand for hydrogen fueling stations63. Several 

companies are already active in developing these stations, including Air Products, 

Praxair, and Linde. Most of the hydrogen dispensed at these stations is expected to 

be produced within the state, primarily from central production facilities and then 

transported by truck to retail outlets. The Clean Fuels Outlet (CFO) ISOR provides 

more information regarding future hydrogen fueling demand, and infrastructure 

development.

5.6 Potential Costs to Local and State Agencies 

The proposed amendments are not expected to result in an increase in costs for local 

and state agencies in the next three to five years. However, as advanced vehicles 

enter the fleet in larger numbers (10-15 years from now), there will likely be an impact 

to state and local revenue from vehicle and fuel sales taxes.

As a result of the projected fleet from the proposed ACC program, large revenue 

losses could occur in later years unless fuel tax policy changes occur. The vast 

majority of the fuel tax loss will result from gasoline vehicles given that the existing tax 

structure applies only to gasoline and diesel fuel and has not changed over the years 

to adjust for inflation or changes in consumption levels. Although a small portion of 

the funding shortfall, ZEVs will result in a loss of fuel taxes because there are currently 

no road taxes on hydrogen and electricity sold for vehicles. Between 2017 and 2025, 

if gasoline taxation rates remain the same, California fuel tax revenue losses would be 

approximately $3.8 billion64, only a small portion of which would be associated with the 

ZEV population. These state revenue losses will partially be offset by higher vehicle 

sales tax revenues given the higher incremental vehicle prices.

Although not a direct effect of the ZEV regulation, local governments will need to 

devote resources to planning and implementing electric charging and hydrogen 

infrastructure. These impacts are becoming clear as the Nissan Leaf and General 

Motors Volt are entering California communities, and as new hydrogen stations are 

being constructed today. These impacts can include the need to prepare city 

inspectors and permitting officials to approve residential charging equipment; the need 

for city planning officials to identify appropriate public and workplace charging; and the 

need for local officials to help evaluate and permit hydrogen stations.

To reduce the impact on local agencies, there are a number of programs designed to 

help communities implement planning programs for alternative fuels.65,66,67 For 

 63 CaFCP, 2009. California Fuel Cell Partnership. CaFCP Action Plan, February 2009. “Hydrogen Fuel Cell 

Vehicle and Station Deployment Plan: A Strategy for Meeting the Challenge Ahead” 

http://www.cafcp.org/sites/files/Action Plan FINAL.pdf 64 See Appendix C for more information. 65 Sonoma, 2011. County of Sonoma (CA), General Services Department, July 2011. “Electric Vehicle Charging 

Station Program and Installation Guidelines”

66 Rocky Mountain Institute, 2009. Rocky Mountain Institute, February 24, 2009. “Project Get Ready: Helping 

Communities Become Electrified Vehicle Pioneers” 
71

electric charging infrastructure, the U.S. DOE and the CEC are both providing grants 

directly to local governments for planning purposes. To augment this resource, 

several partnerships are preparing guidance documents with best practices for local 

governments to aid in their implementation. For electric charging, one partnership is

the California Plug-Electric Vehicle (PEV) Collaborative. For hydrogen, the California 

Fuel Cell Partnership has been working for a number of years to help local 

governments become prepared in planning, siting, and safety review of new stations. 

The U.S. DOE’s Clean Cities coalitions (California has 13 of these cities) also are 

instrumental in helping local governments become prepared for a number of 

alternative fuels.

Implementation of the ZEV regulation requires staff resources to oversee annual 

compliance by manufacturers with ZEV program credits. As the regulation compliance 

requirements increase in future years, and more manufacturers are classified as 

LVMs, this state oversight role may require additional resources.

 67 RolandBerger, 2010b. Roland Berger Strategy Consultants in collaboration with Rocky Mountain Institute, 2010. 

“PEV Readiness Study.”
72

6 EMISSIONS AND HEALTH IMPACTS

Staff’s proposed ZEV amendments will result in an emissions benefit as compared to 

current ZEV regulations, as will the entire ACC program as compared to no ACC 

program. Staff performed a combined LEV, ZEV, and CFO emissions analysis, which 

can be found in Section V of the LEV ISOR. For the purposes of the ZEV regulation

analysis, staff’s emissions assessment includes both criteria pollutant, particulate 

matter (PM) and GHG emissions, accounting for both tailpipe emissions in PHEVs, 

and upstream emissions from all advanced technologies considered. As illustrated 

below, the ZEV requirements provide benefits beyond that achieved by using a fleet 

NMOG + NOx average as proposed in the LEV III criteria emission regulation. This is 

primarily because upstream criteria and PM emissions will be reduced after 

accounting for higher electricity and hydrogen production and lower gasoline 

production at refineries. However, because vehicles produced for the ZEV regulation 

are counted in the LEV III GHG fleet average standard, and because the GHG fleet 

average standard accounts for differences in upstream emissions for electricity and 

hydrogen, the ZEV regulation does not result in further GHG emission improvements 

beyond the LEV III GHG program. 

The recently updated EMFAC 2011 was used to assess the vehicle emission impacts 

of staff’s proposal. Using EMFAC, staff modeled the proposed requirements and 

compared these results to a vehicle fleet under the current ZEV regulation 

(ARB, 2011b). A separate model was used to estimate upstream emissions, including 

production and delivery of electricity and hydrogen and vehicle manufacturing 

emissions.68 Emission impacts from the Regulatory Alternatives A (lower case) and B 

(higher case) are not presented here, although impacts from Alternative C (existing 

regulation) are shown. 

As stated in Section 1, climate change poses a serious threat to the economic wellbeing, public health, natural resources, and environment of California. According to 

staff’s 2009 analysis, ZEVs are the most important technology for the LDV to achieve 

long-term GHG emission reductions. As for criteria pollutant emissions,

NOx emissions in the greater Los Angeles region must be reduced by two thirds to 

meet the current ozone attainment goal, even after considering all of the regulations in 

place today, with the most significant share of needed emission reductions coming

from long-term advanced clean air technologies. In the San Joaquin Valley, the SIP 

identified the need to reduce NOx emissions by 80 tons/day in 2023 through the use 

of long-term and advanced technology strategies. To put this in context, this is 

equivalent to eliminating the NOx emissions from all on-road vehicles operating in 

these regions. This implies ZEVs are needed as a critical part of the future California 

fleet to achieve climate change goals and critical criteria pollutant emission reductions.

 68 See Section V LEV III ISOR for more information. 
73

6.1 California Environmental Quality Act

ARB is the lead agency for the proposed regulation and has prepared an 

environmental analysis pursuant to its certified regulatory program. The California 

Environmental Quality Act (CEQA) at Public Resources Code section 21080.5 allows 

public agencies with regulatory programs to prepare a plan or other written document 

in lieu of an environmental impact report or negative declaration once the Secretary of 

the Resources Agency has certified the regulatory program. ARB’s regulatory 

program has been certified by the Secretary of the Resources Agency.69 As required 

by ARB’s certified regulatory program for the proposed regulations, the environmental 

analysis is included as Appendix B to this ISOR for the rulemaking.70

Appendix B to the ISOR is an Environmental Analysis (EA) that provides an evaluation 

of the potential for environmental impacts associated with the proposed ACC 

Program. The proposed ACC program consists of amendments to the following 

regulations: LEV III, the E-10 Fuels Certification, Environmental Performance Label 

(EPL), ZEV, and the CFO. Four separate Regulatory Notices and Staff Reports have 

been prepared for these proposed amendments. A single coordinated analysis of the 

potential environmental impacts can be found in Appendix B. The EA assesses the 

potential for significant long or short term adverse environmental impacts associated 

with the proposed actions and an analysis of those impacts.71 In accordance with 

ARB’s regulations, the EA also describes any beneficial impacts.72 The resource 

areas from the state CEQA Guidelines environmental checklist were used as a 

framework for assessing potentially significant impacts.73 

If comments that are received during the public review period raise significant 

environmental issues, staff will summarize and respond to the comments in writing. 

The written responses will be included in the Final Statement of Reasons (FSOR) for 

the regulation. In accordance with ARB certified regulatory program, prior to taking 

final action on the proposed regulation, the decision maker will approve the written 

responses.74 If the regulation is adopted, a Notice of Decision will be posted on ARB’s 

website and filed with the Secretary of the Natural Resources Agency for public 

inspection.75

6.2 Impacts to Minority and Low Income Communities

This section provides information on the ARB's activities to reach out to minority and 

low-income communities in the development of the ACC regulations.

 69 State CEQA Guidelines section 15251 (d); CCR, title 17, sections 60005-60008.) 70 CCR, title 17, section 60005. 71 CCR, title 17, section 60005, subd (b). 72 CCR, title 17, section 60005, subd. (d). 73 State CEQA Guidelines, Appendix G. 74 CCR, title 17, section 60007, subd (a). 75 CCR, title 17, section 60007, subd. (b).
74

ARB Environmental Justice Policy

ARB is has made inclusion of environmental justice an integral part of its activities. 

State law defines environmental justice as the fair treatment of people of all races, 

cultures, and incomes with respect to the development, adoption, implementation, and 

enforcement of environmental laws, regulations, and policies.

The Board approved Environmental Justice Policies and Actions (Policies) on 

December 13, 2001. These Policies establish a framework for incorporating 

environmental justice into the ARB's programs consistent with the directives of State 

law. The Policies apply to all communities in California, but recognize that 

environmental justice issues have been raised more in the context of low-income and 

minority communities.

Outreach to Minority and Low Income Communities

Staff conducted workshops in communities with environmental justice concerns. The 

dates of all the workshops were as follows:

Date Location

July 12, 2011 Fresno

July 19, 2011 Pacoima

July 26, 2011 Oakland

Each of the three workshops included an expert panel with opening remarks from a 

local community leader. The panels included one expert that focused on background 

information and environmental impacts of air pollution, one expert in the medical field 

that focused on the health impacts of air pollution, one expert from the American Lung 

Association of California that discussed its report titled “The Road to Clean Air,” and in 

some workshops also had an expert speak about local concerns. For instance, in 

Fresno, one speaker addressed agriculture impacts of climate change. Having local 

community members and leaders participate in the workshops was greatly 

appreciated and added value and a local context to ARB's presence in these 

communities. After community members heard from the panel members, staff 

presented information about the ACC regulations and the CEQA scoping process.

There were a number of different comments and concerns expressed at each 

workshop and staff was able to engage in a constructive dialogue with attendees 

about many air quality and climate change related issues. In general, community 

leaders and community members were very supportive of the work ARB is doing to 

take steps to reduce emissions from PCs and LDTs.

6.3 Health Impacts

Staff estimates that, statewide, implementation of the ACC regulations from 2010 

through 2025 will eliminate approximately 1,400 tons of PM2.5 and 40,000 tons of 

NOX emissions from passenger vehicles. The estimate of the reduction of premature 

deaths associated with these emission reductions for both primary PM and secondary 
75

PM (produced in the atmosphere from the precursor NOX) are between 330 and 530. 

See the LEV III ISOR, subsection V.F for more details on this assessment of health 

impacts. 

6.4 Emissions Impacts 

Staff analyzed the emissions impacts resulting from the ZEV proposal compared to 

the existing regulation. Similar to the cost analysis, this was done assuming 

manufacturers also complied with proposed LEV III fleet standard. Several scenarios 

were created to evaluate a LEV III fleet with and without the new ZEV proposal.76 

WTW emissions profiles were derived from the upstream emissions factors and the 

LEV III fleet vehicle efficiency attributes. This information is summarized in Section 

V.E of the LEV III Staff Report. 

6.4.1 Emissions Comparisons: Vehicle Technologies

BEVs, FCVs, and PHEVs are all ultra-low criteria pollutant and GHG emitting 

technologies, even on a WTW basis. WTW emissions include upstream emissions 

from fuel production and vehicle manufacturing, as well as vehicle emissions from 

PHEVs. Three categories of conventional vehicles are shown to emphasize that their 

emissions profiles are improving over time as a result of the proposed LEV III Criteria 

Pollutant and GHG regulations. 

Figure 16: WTW NOx emissions comparison

 76 In developing this new analysis, it was not accurate to compare this to the ZEV emissions impacts from the 2008 

staff analysis for two reasons. The proposed LEV III emissions regulations mean that the entire fleet will become 

cleaner with or without the ZEV regulation. Additionally, the 2008 staff analysis only included the South Coast air 

basin emission inventory.
76

Figure 17: WTW PM emissions comparison

Figure 18: WTW ROG emissions comparison

*ROG means reactive organic gas
77

Figure 19: WTW GHG emissions comparison

6.4.2 Total Emissions – Criteria and PM

Overall, there will be a reduction in criteria pollutants as a result of the proposed ACC 

program standards. Criteria pollutant emission benefits for the ACC program are fully 

realized in the 2035-2040 timeframe when nearly all vehicles operating in the fleet are 

expected to be compliant with the proposed standards. By 2035 reactive organic gas 

(ROG) emissions would be reduced by an additional 34 percent, and NOx emissions,

by an additional 37 percent, compared to 2035 without the proposed ACC rules. 

Under the proposed rule, the new PM2.5 standard is reduced to 3 mg/mi in 2020 and 

1 mg/mi in 2028. With these standards, PM2.5 emissions will be essentially 

unchanged between 2010 and 2040 as growth in VMT offsets the tightening of the 

standard.

There is no benefit from including the ZEV proposal in terms of vehicle (tank-to-wheel 

or TTW) emissions. The LEV III criteria pollutant fleet standard is responsible for those 

emission reductions in the fleet; the fleet would become cleaner regardless of the ZEV 

regulation because manufacturers would adjust their compliance response to the 

standard by making cleaner conventional vehicles. However, upstream criteria and 

PM emissions are not captured in the LEV III criteria pollutant standard, so additional 

electricity and fuel production in the fleet results in increased upstream criteria 

pollutant emissions. 

Table 6.1 presents the emissions impacts in WTW criteria pollutant and PM emissions 

in 2030 due to staff’s proposal. 2030 was chosen as a reference year to account for a 

significant amount of fleet turn-over. 
78

Table 6.1: Statewide Criteria and PM Emissions in 2030 (tons per day)1

2030 ROG NMOG+ 

NOx PM

LEVIII fleet WTW emissions without new ZEV proposal 231 233 56.4

LEVIII fleet WTW emissions with new ZEV proposal 225 229.5 56.2 1 Refer to the LEVIII ISOR Section V and Appendix Q for additional details. Includes reduced petroleum 

upstream emissions and increased hydrogen and electricity production emissions

The upstream emissions from the production of hydrogen and electricity represents a 

very small fraction of the combined vehicle and upstream emissions impacts of the 

fleet, and is far outweighed by the reduction in gasoline production emissions, creating 

the net benefit shown in Table 6.1 and 6.2. Additionally, a portion of these upstream 

emissions are in non-urban areas.77 

Table 6.2 below provides expanded details on the emission impacts shown in 

Table 6.1, and shows the WTW impacts for these emissions types.

78

Table 6.2: Detailed Statewide Criteria and PM Emission Inputs in 2030 

(tons per day)

2030 ROG NOx PM

LEVIII fleet vehicle emissions (TTW) 1 126 116 26

Upstream emissions from LEVIII fleet without ZEV proposal (WTT) 105 117 30.4

LEVIII fleet WTW emissions benefits without new ZEV proposal 231 233 56.4

Increased upstream emissions from hydrogen 0.22 1.11 0.27

Increased upstream emissions from electricity 0.24 1.00 0.22

Reduced upstream refinery emissions due to ZEVs -6.4 -5.6 -0.66

LEVIII fleet WTW emissions benefits with new ZEV proposal 225 229.5 56.2

Criteria and PM emissions benefits will vary by region throughout the state depending 

on the location of emission sources. Refinery emission reductions will occur primarily 

in the east Bay Area and South Coast region where existing refinery facilities operate. 

As refinery operations reduce production and emissions, the input and output 

activities, such as truck and ship deliveries, will also decline. This includes crude oil

imported through the Los Angeles and Oakland ports, as well as pipeline and local 

gasoline truck distribution in all regions of the state.

The small increase in upstream emissions associated with new electricity and 

hydrogen transportation fuel production will occur in various regions. Hydrogen 

production will predominantly occur from existing centralized hydrogen facilities 

already operating to supply refinery and industrial applications. These facilities are 

primarily located in the large metropolitan areas near gasoline refinery operations. 

The majority of early FCV sales are expected to occur in the South Coast region, the 

hydrogen facilities in this region will likely be used to produce the fuel for the market. 

 77 For details on how these emissions are incorporated into the full fleet, refer to the LEVIII ISOR Section V.E. 78 Refer to the LEVIII ISOR Appendix Q for additional details and a graphical representation of the upstream portion 

of this analysis.
79

Electricity production increases will occur throughout the state at power facilities that 

supply regions where BEV and PHEV sales and use occur. Staff assumes that by 

2020, emissions associated with plug-in vehicle charging will be characterized by new 

power facilities added to the grid between now and 2020. This is assumed to be 

cleaner natural gas facilities as well as new renewables to comply with California’s 33

percent renewable portfolio standard (RPS).

The upstream emissions impacts are quantified in the LEVIII ISOR in Appendix V.E, 

and include an estimation of the split between urban and non-urban source locations. 

6.4.3 Total Emissions - Climate Change

Overall, the ACC program would provide major reductions in GHG emissions. By 

2025, CO2 emissions would be reduced by almost 14 million metric tonnes (MMT) per 

year, which is 12 percent from baseline levels. In reduction increases in 2035 to 32

MMT which is a 27 percent reduction from baseline levels. By 2050, the proposed 

regulation will reduce emissions by more than 42MMT per year, which is a reduction 

of 33 percent from baseline levels. 

The ZEV regulation does not provide GHG emission reductions in addition to the 

LEV III GHG regulation given that ZEV emissions are included in determining 

compliance with the GHG standard. Specifically, because the GHG standard includes 

upstream emissions, in addition to the vehicle emissions, there is no difference in 

GHG emissions under varying ZEV scenarios. 

Given that climate change emissions remain in the upper atmosphere for long periods 

of time (50-100 years), climate impacts are a function of the cumulative emissions. As 

a result, early reduction in annual climate emission rates is important to ultimately 

stabilize the atmosphere. For the 2050 emission projections from this proposal, 

emission rates were assumed to remain fixed at the levels in this analysis: 2020 

emission rates for upstream factors and 2025 emission rates for vehicle performance.

6.4.4 Energy Diversity and Energy Demand

The vehicle technologies expected to be used in compliance with the regulation 

typically use fuel more efficiently and/or use alternative fuels, and thus when fully 

commercialized will reduce demand for petroleum fuels. Reduced demand for 

gasoline and diesel alleviates the reliance on a single fuel source, creating a more 

robust fuel supply. Additionally, the erratic and increasing price trends of oil create 

economic losses for California. Reducing gasoline demand will also reduce the need 

for additional refining, transportation and distribution facilities, thus preventing 

additional air and water pollution as noted above. 

Moreover, because electricity and hydrogen can be produced from renewable 

resources such as solar, wind, or hydropower, or biomass feedstock, the staff’s 

proposed amendments would increase the number of vehicles using these fuels and 

help pave the way towards a sustainable energy future.
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7 COST-EFFECTIVENESS

Cost-effectiveness is a measure of the cost incurred to achieve a specific outcome, 

and is a metric that is used to compare alternatives to achieve the same outcome. In 

ARB regulations, the specific outcome measured is vehicle emissions. Although a 

cost-effectiveness value with emissions is determined here, the ZEV regulation does 

not have explicit emission reduction targets given that the measure of compliance is 

the number of advanced vehicles sold. As a result, the cost effectiveness value is not 

the primary factor used to determine the proposed requirement. However, looking at 

the both the LEV III Criteria Pollutant and GHG regulations and ZEV regulation 

together, there will likely be a $290 savings per ton of CO2 reduced in 2025 and $320 

savings per ton CO2 reduced in 2035. For criteria pollutants, the cost effectiveness of 

the three regulations will be $4 per ton of ROG plus NOx reduced. 
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8 SUMMARY AND STAFF RECOMMENDATION

Adoption of staff’s proposed amendments to the ZEV regulation will begin a

transformation of California’s LDV fleet to one that uses a portfolio of fuels most of 

which will sustainable and exhibit low carbon emissions. As the technology-forcing 

piece of the ACC package, the ZEV regulation is the catalyst to this transformative 

process. Proposed amendments to the regulation focus on technologies that help 

meet mid- and long-term climate goals, while simplifying the program where needed

as much as possible. By requiring increased numbers of ZEVs and TZEVs in the 

2018 through 2025 model year timeframe, vehicle costs will decrease due increased 

production volumes driving down battery and fuel cell costs, which will help these 

advanced technologies achieve commercial success in the California LDV market. 

The following table is a summary of staff proposed changes:

Timeframe Purpose of Proposed 

Amendment

Proposed Amendment

2009 – 2017 

Model Year

Compliance Flexibility Extend travel provision for BEVs

Extend advanced demonstration provision

Remove carry forward provision

Reduce 2015 through 2017 requirement for 

IVMs

Adjust Credits and 

Allowances

Increase credits for Type V ZEVs to 9 credits 

per vehicle

Add Type I.5x and Type IIx vehicles

2018 and 

Subsequent 

Model Years

Adjust Manufacturer 

Size Definitions

Modify IVM and LVM size definitions

Modify transitions for manufacturers changing 

size categories

Focus Requirements on 

ZEVs and TZEVs

Remove PZEV and AT PZEVs from 2018 and 

beyond compliance

Allow manufacturers to use banked PZEV and 

AT PZEVs, under a cap

Increase 2018 + 

Requirements

Increase overall credit requirements and reduce 

the amount of credits earned per vehicle

Provide Flexibility for 

IVMs

Allow IVMs to meet requirement with credits 

from TZEVs

Continue Advanced Demonstration credits for 

non-LVMs

Simplify Credit 

Calculations

Calculate ZEV and TZEV credits based on 

range

Modify Travel Provision Extend Travel Provision for FCVs only

Encourage GHG Over 

Compliance

Allow manufacturers to offset part of the 2018 

through 2021 ZEV requirement through overcompliance with GHG fleet standard

Add New Vehicle Add range extended BEVs as compliance 

option
82

Staff recommends that the Board amend sections 1962.1 and 1962.3(renumbered 

from 1962.2), Title 13, California Code of Regulations, and the incorporated test 

procedures and related regulations, and adopt section 1962.2, and the incorporated 

test procedures. The proposed amendments and adoptions are set forth in the 

Proposed Regulation Order in Appendix A. 
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9 SUMMARY AND RATIONALE FOR PROPOSED REGULATIONS

The need and rationale for the proposed amendments were discussed extensively in 

Chapter 2. In addition, in this chapter, staff provides a plain English description of the 

proposed amendments to the ZEV regulation. 

Pursuant to Government Code section 11349.1, Government Code section 

11346.2(b)(1), and title 1, California Code of Regulations, section 10, staff is providing 

a brief summary below that identifies each section in the regulation where 

amendments are proposed and describes the rationale for each proposed 

amendment.

§1962.1 Zero-Emission Vehicle Standards for 2009 through 2017 Model Year 

Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles.

Previously, section 1962.1 and incorporated test procedures applied to 2009 and 

subsequent model years. Section 1962.1 and its incorporated test procedures now

apply to 2009 through 2017 model years, and a new section (section 1962.2) and its 

incorporated test procedures apply to 2018 and subsequent model years. Language 

is being changed throughout section 1962.1 to clarify the applicable model years. 

Also, the word “section” was changed to “subdivision” for clarification purposes. Also, 

the word “Transitional Zero Emission Vehicle” or “TZEV” has replaced the word 

“Enhanced Advanced Technology Partial Zero Emission Allowance Vehicle” or 

“Enhanced AT PZEV”. Throughout, spelling and grammatical changes have also 

been made.

(a) The purpose of this subdivision is to define ZEV certification 

standards. This subdivision was amended to clarify that the standards apply to 2009 

through 2017 model years, rather than just models.

(b)(1)(A) The purpose of this subdivision is to describe manufacturer’s 

minimum percentage ZEV credit requirement. This subdivision was modified to clarify 

the origin of the production number that a manufacturer’s requirement is to be based 

on, which is in the annual NMOG production report. The NMOG production report 

submitted by a regulated manufacturer to ARB indicates the number of vehicles 

delivered for sale in California, and to which standard each vehicle is certified. A 

sentence was added to ensure there were no discrepancies as to which production 

number is used to determine a manufacturer’s requirement.

(b)(1)(B) The purpose of this subdivision is to calculate the number of 

vehicles to which the percentage ZEV requirement is applied. This subdivision was 

amended to organize the methods by applicable model years and to clarify the original 

intent of the language. This subdivision allows a manufacturer to switch production 

determination methods, explains that production averaging has no effect on a 

manufacturer’s size determination, and clarifies how a manufacturer should treat 

vehicles delivered for sale by other manufacturers in their production determination.
84

(b)(1)(B)1. A clarifying sentence was added to explain that a manufacturer 

could base its ZEV obligation on the number of vehicles produced and delivered for 

sale in the same year, rather than on a three year average method.

(b)(1)(B)2. A sentence was added to clarify an example of how the prior year 

method works. 

(b)(2)(D)1. The purpose of this subdivision is to describe the ZEV 

requirements for LVMs for model years 2012 through 2014. The language was 

amended to clarify the intent of the subdivision, which is that credits are required for 

compliance and are generated from manufacturers delivering ZEVs for sale. 

(b)(2)(D)2. The purpose of this subdivision is to describe the ZEV 

requirements for LVMs for model years 2015 through 2017. The language was 

amended to clarify the intent of the subdivision, which is that credits are required for 

compliance and are generated from manufacturers delivering ZEVs for sale. 

(b)(2)(D)4. The purpose of this subdivision is to describe how additional 

credits for ZEVs placed in transportation systems can be used to meet a 

manufacturer’s ZEV requirement. The language was modified to clarify that the limit 

described applies to credits earned by ZEVs placed in transportation systems.

(b)(2)(E) This subdivision is being deleted because requirements for 2018 

and subsequent model years have been moved to section 1962.2.

(b)(3) This subdivision allows IVMs to meet their entire ZEV requirement 

through delivering for sale PZEVs. This subdivision was amended to reduce the IVM’s 

overall credit requirement in model years 2015 through 2017 to allow them more time 

to transition into more stringent requirements starting in model year 2018.

(b)(4) This subdivision describes how SVMs and ILVMs are not 

mandated to produce ZEVs by the ZEV regulation, but may earn and market ZEV 

credits. This subdivision was clarified to ensure SVMs and ILVMs are able to earn 

and market TZEV and AT PZEV credits. 

(b)(5) This subdivision is being deleted because it is not necessary to 

clarify how a manufacturer is to count ZEVs and PZEV in a manufacturer’s fleet 

average NMOG calculations. Section 1961 clearly explains how a PZEV and ZEV 

should be counted in a manufacturer’s NMOG calculations.

(b)(7)(A) This subdivision explains how a manufacturer applies the ZEV 

regulation as the manufacturer increases its California production volume and is 

redefined as a differently sized manufacturer. Currently, manufacturers are given five 

years of lead time when transitioning into a larger size definition. For example, if a 

manufacturer were to increase in sales, such that its 2011 through 2013 sales average 

exceeded the current large volume manufacturer threshold of 60,000 sales, the 
85

manufacturer would be subject to the full ZEV requirements in model year 2019. 

However, due to staff proposed modifications for definition and lead time, the 

language is being modified to reflect that manufacturers starting their transition before 

2018 will be subject to full ZEV requirements starting in model year 2018. This 

means, for example, if a manufacturer’s 2013 through 2015 sales average (for the first 

time) is 61,000 vehicles, then instead of being subject to large volume manufacturer 

requirements in 2021, the manufacturer will be subject to large volume manufacturer 

requirements in 2018. Similar language is being added to reflect that when 

aggregation affects a manufacturer’s size, the manufacturer will be subject to the 

stepped up requirements starting in the fourth model year or in 2018, whichever 

occurs first. 

(b)(7)(C) This subdivision explains how to calculate California production

volume in change of ownership situations. This subdivision was modified to explain 

how to determine the model year when a manufacturer is simultaneously producing

two model years of vehicles at the time of a change of ownership, which is to be 

based on the earlier model year. Additionally, an example was added to clarify the 

application of the model year determination.

(c)(2)(A) This subdivision establishes which tailpipe emission standards a 

PZEV is to certify to in section 1961. This subdivision is being amended to separate 

the 2009 through 2014 model years standards from the 2015 through 2017 model

year standards. This is due to new LEV III criteria pollutant fleet standards beginning 

in model year 2015. These will include new tailpipe standards for NMOG + NOx. 

Staff will also be proposing new emission certification categories that go beyond 

SULEV standards. Due to these change in LEV III, the language is being modified so 

that for a PZEV to earn credit within the ZEV regulation in 2015 and subsequent 

model years, the vehicle must be certified to the more stringent SULEV 30 or SULEV 

20 standards, and meet LEV III zero-evaporative standards. 

(c)(2)(B) This subdivision establishes which evaporative emission 

standards a PZEV is to certify to in section 1976, which is the zero evaporative 

standard. This subdivision is being amended to separate 2009 through 2014 model 

year standards from the 2015 through 2017 model year standards. This is due to new

LEV III criteria pollutant fleet standards beginning in model year 2015. There will be 

two options for meeting the zero evaporative emissions requirement in model year 

2015 and beyond. Option 1 is identical to the current "optional zero evaporative" 

requirement in that manufacturers must demonstrate a zero evaporative fuel system 

using a rig test and also meet a whole vehicle test value of 350 mg. Option 2 allows 

manufacturers to demonstrate a zero evaporative system by doing a "mini rig test" and 

by meeting a whole vehicle test value of 300 mg. In addition, if a manufacturer 

chooses this second option, they can average among the vehicles within a standard 

category. Option 1 and Option 2 are equivalent. Due to these change in LEV III, the 

language is being modified so that for a PZEV to earn credit within the ZEV regulation 

in 2015 and subsequent model years, the vehicle must be certified to LEV III zero 

evaporative standards, but can use either option.
86

(c)(3)(A) The purpose of this subdivision is to show the equation for 

determining a vehicle’s zero emission VMT allowance. The table within this 

subdivision is being corrected to resolve inconsistencies in the zero emission VMT 

allowance equation. The language has also been clarified as to the UF to be used in 

determining a manufacturer’s zero emission VMT allowance, which is according to 

Section 4.5.2 Equation 5 and the “Fleet UF” Utility Factor Equation Coefficients in 

Section 4.5.2, Table 3, in J2841 (March 2009). Also the language is being clarified 

that a vehicle may not earn more than 1.39 zero emission VMT PZEV allowances.

(c)(3)(B) This subdivision is being deleted because no automakers have 

included vehicles requiring or requesting such exemptions in any vehicle planned 

through 2017 model year.

(c)(4)(B)1. The purpose of this subdivision is to describe the varying types of 

advanced componentry allowances for which a manufacturer may qualify. This 

subdivision is being amended to remove Type C advanced componentry allowance. 

ZEV technology has advanced and staff now believes that the minimum qualifying 

system should be increased to the higher voltage Type D because (1) AT PZEVs need 

to make use of systems that more closely represent those that are needed for ZEVs, 

and (2) no manufacturers have certified, or have disclosed plans to certify, a Type C 

AT PZEV. The language prior to the table explaining the various advanced 

componentry types is being amended to reflect that there are four rather than five 

types of advanced componentry allowances. Additionally, the table is being updated 

with new language to reflect the intent of the electric drive system peak power output 

for Type F and Type G advanced componentry allowances and that the vehicle must 

travel 10 miles all electrically on either the UDDS or the US06 drive schedule. 

(c)(4)(B)4. This subdivision is being deleted to remove Type C advanced 

componentry allowance. ZEV technology has advanced and staff now believes that 

the minimum qualifying system should be increased to the higher voltage Type D 

because AT PZEVs need to make use of systems that more closely represent those 

that are needed for ZEVs, and no manufacturers have certified, or have disclosed 

plans to certify, a Type C AT PZEV. 

(c)(4)(B)9. The purpose of this subdivision is to establish severability, which 

allows that if any of 1962.1(c)(4)(B)1. – 8. is found, that the remainder of section 

1962.1 remains in full force and effect. The text in this subdivision is being simplified 

to reflect the intent of the language.

(c)(7)(B) The purpose of this subdivision is to allow a PZEV which earns a 

zero emission VMT allowance to earn an additional credit multiplier if the vehicle is 

purchased or offered for an extended lease. This subdivision is being clarified to 

reflect the intent that the multiplier will no longer be available after model year 2011. 

(d)(5)(A) The purpose of this subdivision is to define the various ZEV tiers 

for determining a vehicle’s credit. This subdivision is being modified to define Type 
87

I.5x and Type IIx vehicles (range extended BEVs), vehicles are referenced in two 

other places in section 1962.1. 

(d)(5)(C) The purpose of this subdivision is to explain how a manufacturer 

earns ZEV credits, and how delivered for sale and placed in service is credited for 

each ZEV. The language is being modified to reflect that a vehicle must be delivered 

for sale and placed in service in the same state in order to earn the total credit 

amount. This change is due to some manufacturers having internet based sales, and 

questions surrounding the location of a vehicle’s delivery and placement in service. 

Staff’s proposed change clarifies the original intent of the provision. The language has 

also been modified to place a five year limit on 2012 and prior model year ZEVs to 

collect “placed in service” credit. This five year limit to ensure that the ZEVs offered to 

consumers are moderately current advanced technology and advanced technology 

components have not deteriorated. Additionally, the language and table have been 

modified to reflect the new Type I.5x and Type IIx category, and the amount of credits

earned in the 2012 through 2017 timeframe. The table has also been amended to 

reflect that Type V ZEVs, which are 300 mile range FCVs, earn 9 credits each in the 

2015 through 2017 timeframe. This modification gives FCVs additional incentives as 

compared to BEVs, which have been affected due to other modifications in this 

timeframe.

(d)(5)(D) The purpose of this subdivision is to allow a ZEV to earn an 

additional credit multiplier if the vehicle is purchased or offered for an extended lease. 

This subdivision is being clarified to reflect the intent that the multiplier will no longer 

be available after model year 2011. 

(d)(5)(E) The purpose of this subdivision is allow manufacturers to count a 

ZEV delivered for sale and placed in service in California as if it were also delivered 

for sale and placed in service in a Section 177 ZEV state.

(d)(5)(E)1.a. This subdivision is being clarified to apply to manufacturers with a 

ZEV requirement only, which is the original intent of the text.

(d)(5)(E)1.b. This subdivision is being clarified to apply to manufacturers with a 

ZEV requirement only, which is the original intent of the text.

(d)(5)(E)2. This subdivision is being clarified to apply to manufacturers with a 

ZEV requirement only, which is the original intent of the text. This subdivision has 

also been clarified to allow Type I.5x and Type IIx vehicles under this provision, 

through 2017 model year. Additionally, this subdivision is being changed to reflect 

that both intermediate volume and LVMs may use this provision, not just LVMs. Also, 

manufacturers producing Type I, I.5, and II ZEVs, which are BEVs, may use this 

provision for those vehicles through 2017 model year, rather than just 2014 model 

year. California markets have matured and are well prepared for increased sales 

requirements. However, markets in Section 177 ZEV states need additional time to 
88

prepare for ZEVs, and some vehicle manufacturers need time to expand their BEV 

offerings to other states and to different climates.

(d)(5)(F) The purpose of this subdivision is to describe the specifications 

and requirements that a NEV must meet in order to received ZEV credit.

(d)(5)(F)3. The purpose of this section is to describe the warranty that must 

be offered for NEVs that qualify for credits under the ZEV regulation. The language is 

being simplified and clarified to better explain rules regarding prorated NEV 

warranties.

(d)(5)(F)5. This subdivision is being added to require that NEVs must meet 

the charging connection standard starting in model year 2014 to ensure all electric 

vehicles, including NEVs meet the same standard.

(d)(5)(G) This subdivision is being added to describe how Type I.5x and 

Type IIx vehicles earn ZEV credit. Type I.5x and Type IIx vehicles are BEVs equipped 

with an APU.

(d)(5)(G)1. This subdivision is being added to require Type I.5x and Type IIx 

vehicles to meet PZEV requirements, ensuring the vehicles are low emitting under all 

operation. 

(d)(5)(G)2. This subdivision is being added to require Type I.5x and Type IIx 

vehicles to meet Type G advanced componentry requirements, that is, the vehicles 

must at least be able to run 10 all electric US06 miles before the APU turns on. 

(d)(5)(G)3. This subdivision is being added to require the vehicle’s UDDS 

range after the APU first starts is less than or equal to the vehicle’s all electric UDDS

test range prior to the APU start. The subdivision also clarifies that the APU may not 

start until the battery is being full depleted. These requirements ensure that the APU 

functionality is limited and that the unit is not relied upon instead of the battery electric 

power.

(d)(5)(G)4. This subdivision is being added to require that Type I.5x vehicles 

must have at least 75 miles electric urban dynamometer range and that Type IIx 

vehicles must have at least 100 miles electric urban dynamometer range. Staff 

established a minimum range of 80 miles for Type I.5x and Type IIx vehicles because 

the examples of “full function” BEVs coming to market all have at least 80 miles range. 

It is important that the minimum range for eligibility be equivalent to full function BEVs 

in the marketplace. 

(g)(2)(A) This subdivision explains how the credits earned by a 

manufacturer are expressed in the ZEV bank. This subdivision is being amended to 

separate the 2009 through 2014 model years standards from the 2015 through 2017 

model year standards. Up to model year 2014, ZEV credits are expressed in terms of 
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g/mi NMOG. After model year 2015, the language is being modified to reflect that 

ZEV credits will now be expressed in terms of whole ZEV credits. This is due to new

LEV III criteria pollutant fleet standards beginning in model year 2015. 

(g)(2)(B) This subdivision explains how the credits earned by a 

manufacturer are expressed in the ZEV bank. This subdivision is being amended to 

separate the 2009 through 2014 model years standards from the 2015 through 2017 

model year standards. Up to model year 2014, PZEV credits are expressed in terms 

of g/mi NMOG. After model year 2015, the language is being modified to reflect that 

PZEV credits will now be expressed in terms of whole ZEV credits. This is due to new

LEV III criteria pollutant fleet standards beginning in model year 2015. 

(g)(2)(C) This subdivision explains that various credit types are held in 

separate accounts within the ZEV bank. This subdivision is being amended to include 

a separate account for Type I.5x and Type IIx vehicles, since those credits are treated 

differently. 

(g)(2)(D) This subdivision is being added to clarify how ZEV credits and 

debits are to be rounded. This amendment is meant to provide clarification and to 

avoid differences in calculating ZEV credits and debits.

(g)(2)(E) This subdivision is being added to explain how g/mi NMOG ZEV 

credits will be converted into ZEV credits after 2014 model year. This will be 

accomplished by dividing each manufacturer’s 2014 model year g/mi NMOG ZEV 

credit balance by 0.035. This is due to ZEV credits being expressed in terms of whole 

ZEV credits starting in model year 2015.

(g)(2)(F) This subdivision is being added to explain how a manufacturer is 

to convert its PZEV and AT PZEV credits for use after model year 2017. Due to staff’s 

proposed change no longer allowing a manufacture to meet part of its ZEV 

requirement with PZEV and AT PZEV credits, manufacturers will be left with banks of 

PZEV and AT PZEV credits. In a shift toward requiring manufacturers to place 

vehicles rather than use banked credits in order to comply with the regulation, it is 

appropriate to discount and limit the use of banked PZEV and AT PZEV credits in 

2018 and subsequent model years. This provision allows manufacturers to convert 

those credits through discounting the value of the credits after model year 2017 model 

year compliance. 

(g)(4) The purpose of this subdivision is to allow manufacturers to earn 

full credit for TZEVs and ZEVs placed in advanced demonstration programs, even if 

the vehicle is not delivered for sale or placed in service. This subdivision is being 

reorganized to into two subdivisions: (A) TZEVs and (B) ZEVs. This is due to 

advanced demonstration programs expiring for TZEVs in 2014 model year, and 

continuing for ZEVs through model year 2017. New text in subdivision (B) is 

duplicative, only extending the availability of advanced demonstration credits for 
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ZEVs, and describes guidelines for ZEVs placed in advanced demonstration 

programs. 

(g)(5)(A) The purpose of this subdivision is to explain transportation system 

credits and the general guidelines for manufacturers placing ZEV program vehicles 

into transportation systems. This subdivision is being amended to explicitly restrict 

manufacturers from being able to use subdivision 1962.1(d)(5)(E) – the travel 

provision- for transportation system credits. This language is being added to clarify 

the original intent of the language: manufacturers are only allowed to travel vehicle 

credits, not additional credits earned by vehicles placed in specific applications.

(g)(5)(B) The purpose of this subdivision is to describe how manufacturers 

earn transportation system credits. This subdivision is being amended to allow Type 

I.5x and Type IIx vehicles to earn transportation system credits. This is because Type 

I.5x and Type IIx vehicles are a new vehicle category and are to be treated the same 

as ZEVs under most circumstances. The table in this subdivision is also being 

amended to award fewer credits for TZEVs and ZEVs placed in transportation system 

credits. Limiting the number of credits offered for reasons other than vehicle 

placement is to ensure ZEV and TZEV commercial success, and simplifies the 

regulation. 

(g)(5)(C)1. The purpose of this subdivision is to describe the caps on the use 

of credits earned by manufacturers placing ZEVs in a transportation system. This 

subdivision is being amended to include Type I.5x and Type IIx vehicles. This is 

because Type I.5x and Type IIx vehicles are a new vehicle category and are to be 

treated the same as ZEVs under most circumstances. 

(g)(5)(D) The purpose of this subdivision is to explain how ARB Executive 

Officer is to allocate transportation system credits to manufacturers. The intent of the 

language is being clarified to specify that vehicles must be placed in a transportation 

system for at least two years, as stated in 1962.1(g)(5)(A). This subdivision is also 

being amended to sunset after model year 2017 compliance. It is not necessary to 

continue these car sharing programs, when mostly third parties are running 

transportation system programs, and earning credit, rather than the manufacturers 

themselves. After meeting with the third parties responsible for transportation 

systems, staff believes it is more important to establish incentive programs for 

transportation system, rather than allow third parties to earn credit through 

transportation systems, and sell their credits to regulated manufacturers. 

(g)(6) The purpose of this subdivision is to explain how a manufacturer 

submits credits for compliance with the regulation to ARB’s Executive Officer, and how 

ZEV credits can be used to meet a manufacturer’s obligation. This subdivision is 

being amended to separate 2009 through 2014 model years from the 2015 through 

2017 model years. This is due to ZEV credits being expressed in terms of ZEV 

credits, instead of in g/mi NMOG ZEV credits, starting in model year 2015.
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(g)(6)(A) The purpose of this subdivision is to explain how manufacturers 

are allowed to use NEV credits to meet its obligation. The table in this subdivision is 

being amended to extend the caps for NEV credits through 2017. The caps through 

2014 were sufficient, and it is appropriate to extend the same caps through model 

year 2017.

(g)(6)(B) The purpose of this subdivision is to limit a large volume 

manufacturer’s ability to bank a ZEV credit after it is earned. After the time limit is 

reached, the manufacturer may only use the banked ZEV credit to meet the portion of 

its requirement that can be met with TZEVs, AT PZEVs, or PZEVs. This subdivision is 

being amended to clarify the intent of the text: credits from ZEVs but not from NEVs 

are limited under this provision. Additionally, this subdivision is being amended to 

sunset the carry forward provisions for ZEVs after 2011 model year. Currently 

requirements plateau for three years at a time but hold steady indefinitely at a 

relatively low level for 2018 through 2025 model years. Because staff is proposing to 

increase volumetric requirements each year for model years 2018 through 2025, it is 

unlikely that manufacturers will be able to bank large volumes of credits for later use.

(g)(6)(C) The purpose of this subdivision is to limit to two years how long 

manufacturers other than LVMs are able to bank a ZEV credit after it is earned. This 

subdivision is being amended to clarify the intent of the text: credits from ZEVs but not 

from NEVs are limited under this provision. Additionally, this subdivision is being 

amended to sunset the carry forward provisions for ZEVs after 2011 model year. 

Currently requirements plateau for three years at a time but hold steady at a relatively 

low level for 2018 through 2025 model years. Because staff is proposing to increase 

volumetric requirements each year for model years 2018 through 2025, it is unlikely 

that manufacturers will be able to bank large volumes of credits for later use.

(g)(6)(D) This subdivision is being added to specify that manufacturers may 

use Type I.5x and Type IIx vehicles to meet up to 50 percent of the portion of a 

manufacturer’s requirement that must be met with credits from ZEVs. Type I.5x and 

Type IIx vehicle credits are limited to ensure LVMs still produce pure ZEVs in the 2012 

through 2017 timeframe. 

(g)(7)(A) This subdivision describes the amount of time a manufacturer has 

to fulfill a ZEV obligation deficit. This subdivision is being amended to separate 2009 

through 2014 model years from the 2015 through 2017 model years. This is due to 

ZEV credits being expressed in terms of whole ZEV credits, instead of in g/mi NMOG 

ZEV credits, starting in model year 2015. Additionally, the word “credits” is added 

throughout to clarify that a manufacturer is required to submit credits in compliance 

with the requirement, rather than vehicles. This subdivision is also being amended to 

clarify the intent that only credits from ZEVs are allowed to fulfill a ZEV deficit. 

(g)(8) The purpose of this subdivision is to explain that a manufacturer 

will be subject to penalties if it fails to make up a ZEV deficit, and gives the equation 

for calculating the resulting ZEV penalty. This subdivision is being amended to 
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separate 2009 through 2014 model years from the 2015 through 2017 model years. 

This is due to ZEV credits being expressed in terms of whole ZEV credits, instead of in 

g/mi NMOG ZEV credits, starting in model year 2015. Staff interprets the overall 

penalty for ZEV non-compliance to be $5,000 per whole credit not produced. The 

language in this subdivision is being amended to reflect this intent

(i)(2) This subdivision is being added to define “auxiliary power unit” 

because range extended BEVs are equipped with an auxiliary power unit.

(i)(3) This subdivision is being renumbered due to the addition of other 

definitions.

(i)(4) This subdivision is being renumbered due to the addition of other 

definitions.

(i)(5) This subdivision is being renumbered due to the addition of other 

definitions.

(i)(6) This subdivision defines Enhanced AT PZEVs. This subdivision 

is being amended to indicate that Enhanced AT PZEV is nomenclature used through 

2011 model year, and that Transitional Zero Emission Vehicle or TZEV is 

interchangeable for Enhanced AT PZEV. This subdivision is being renumbered due to 

the addition of other definitions.

(i)(7) This subdivision is being renumbered due to the addition of other 

definitions.

(i)(8) This subdivision is being renumbered due to the addition of other 

definitions.

(i)(9) This subdivision is being added to define “proportional value”

because this value is used to calculate the ratio applied to credits earned in Section 

177 ZEV states for subdivision 1962.1(d)(5)(E).

(i)(10) This subdivision is being added to define “Range Extended 

Battery Electric Vehicle” because manufacturers are allowed to meet a portion of their 

obligation with this new type of vehicle.

(i)(11) This subdivision is being renumbered due to the addition of other 

definitions.

(i)(12) This subdivision is being renumbered due to the addition of other 

definitions.
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(i)(13) This subdivision is being added to define “Transitional Zero 

Emission Vehicle” to redefine Enhanced AT PZEVs, and is the new nomenclature for 

these types of vehicles for 2012 and subsequent model years.

(i)(14) This subdivision is being renumbered due to the addition of other 

definitions.

(i)(15) This subdivision is being renumbered due to the addition of other 

definitions.

(j) The purpose of this subdivision is to define abbreviations used 

throughout section 1962.1. New abbreviations are being added as appropriate.

(l)(1)(A) The purpose of this subdivision is to clarify that credit balances for 

each type of ZEV regulation vehicle is required to be disclosed annually. This 

subdivision is being amended to include Type I.5x and Type IIx vehicles. This is 

because Type I.5x and Type IIx vehicles are a new vehicle category and are to be 

treated the same as ZEVs under most circumstances. 

Health & Safety Code sections 38562 and 43018.5 are being added as references to 

reflect the contribution of those sections towards the GHG emission reductions 

referenced in sections 38562 and 43018.5. Health and Safety Code section 43204 

was added as a reference because subdivisions 1962.1(c)(2)(D) and 1962.2(c)(2)(D) 

reference the warranty requirements of California Code of Regulations subdivisions 

2037(b)(2) and 2038(b)(2) and, in turn, those subdivisions reference the requirements 

of Health and Safety Code section 43204.

List of Changes to “California Exhaust Emission Standards and Test 

Procedures for 2009 through 2017 Model Zero-Emission Vehicles and Hybrid 

Electric Vehicles in the Passenger Cars, Light-Duty Trucks and Medium-Duty 

Vehicle Classes”

The test procedures are included by reference in section 1962.1, and contain an exact 

copy of the regulatory text, including the amendments being proposed in section 

1962.1 in Section C. Previously, section 1962.1 and incorporated test procedures

applied to 2009 and subsequent model years. Section 1962.1 and its incorporated 

test procedure now apply to 2009 through 2017 model years, and a new section 

(section 1962.2) and its incorporated test procedures apply to 2018 and subsequent 

model years. Language is being changed throughout the test procedures to clarify the 

applicable model years. Additionally, due to the addition of a new Section E, existing 

Sections E through I have been renumbered accordingly. 
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Section B. Definitions and Terminology

“All-Electric Range” – This definition is being amended to remove language that 

applies to blended off vehicle charge capable hybrid electric vehicles because 

equivalent all electric range does not mean all electric range.

“Auxiliary power unit” – This definition is being amended to add language that 

specifies what auxiliary power unit means for the purposes of range extended BEVs. 

This definition conforms with the definition found in section 1962.1.

“Enhanced AT PZEV” – This definition is being amended to apply only to model year 

2009 through 2011 vehicles, due to new nomenclature used in model year 2012 and 

subsequent model years. Additionally, clarification is being added to the definition that 

Transitional Zero Emission Vehicle or TZEV means Enhanced AT PZEV. 

“Proportional value” – This definition is being added to define the value used to 

calculate the ratio applied to credits earned in Section 177 ZEV states for 

subdivision 1962.1 (d)(5)(E) (subdivision C.4.5(e) of test procedures).

“Range extended battery electric vehicle” – This definition is being added to define a 

new vehicle category with which manufacturers are allowed to meet a portion of their 

obligation.

“Transitional zero emission vehicle” – This definition is being added to redefine 

Enhanced AT PZEVs, and is the new nomenclature for these types of vehicles in 2012 

and subsequent model years.

“Type I.5x”- This definition is being added to define a new vehicle category with which

manufacturers are allowed to meet a portion of their obligation.

“Type IIx” - This definition is being added to define a new vehicle category with which

manufacturers are allowed to meet a portion of their obligation.

“Zero Emission Vehicle Miles Traveled” – This definition is being amended to clarify 

that “VMT” means vehicle miles traveled.

Section C. Zero Emission Vehicle Standards

The amendments made throughout section 1962.1 have been duplicated in this 

section of the test procedure. 

Section D. Certification Requirements

D.1. This subdivision exempts ZEVs from all mileage and service accumulation, 

durability-data vehicle, and emission-data vehicle testing, because ZEVs do not emit. 

This subdivision is being amended to ensure Type I.5x and Type IIx vehicles are not 
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exempt from such requirements because these vehicles have tailpipe and evaporative 

emissions. 

Section E. Determination of NEV Acceleration, Top Speed, and Constant Speed 

Range

This new subdivision is being added to specify testing methods for NEV certification.

Section G. Test Procedures for 2012 and Subsequent Model Off-Vehicle Charge 

Capable Hybrid Electric Vehicles. 

G.12 This new subdivision is needed to establish the calculations that must be 

used to determine the GHG emissions values attributable to off vehicle charge 

capable hybrid electric vehicles for the 2017 and subsequent model years.

G.12.1 This subdivision is needed to calculate the combined city/highway GHG

emissions value for an off-vehicle charge capable hybrid electric vehicle. 

G.12.2 This subdivision is needed to calculate the city (urban) GHG emissions 

value for off-vehicle charge capable hybrid electric vehicles. 

G.12.2.1 This subdivision is needed to provide the equation used to calculate the 

urban GHG emissions value for off vehicle charge capable hybrid electric vehicles. 

G.12.2.2 This subdivision is needed to define the “Charge-Depleting to ChargeSustaining Range” that is used in the calculations in subsections G.12.2.5 and G.12.3. 

G.12.2.3 This subdivision is needed to provide the utility factors for urban and 

highway cycles that are used in the calculations in subsections G.12.2.1 and G.12.3. 

G.12.2.4 This subdivision is needed to provide the equation used to calculate the 

charge-depleting GHG rate from electricity use in each test cycle used in the 

calculation in subsection G.12.2.1. 

G.12.2.5 This subdivision is needed to provide the equation used to calculate the 

urban or highway charge-depleting electricity use used in the calculation in subsection 

G.12.2.4.

G.12.2.6 This subdivision is needed to provide the equation used to calculate the 

weighted CO2 mass emissions of the charge-sustaining test used in the calculation in 

subsection G.12.2.1.

G.12.3 This subdivision is needed to calculate the highway GHG emissions 

value for off vehicle charge capable hybrid electric vehicles. 
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Section K. Advanced Technology Demonstration Program Data Requirements

This new subdivision is being added to specify what is required of manufacturers to 

submit to ARB’s Executive Officer for approval of credits earned in an advanced 

technology demonstration program, according to subdivision 1962.1(g)(4) (subdivision 

C.7.4 of test procedures). These data requirements have been available in 

Manufacturers Advisory Correspondence 06-02, and have now been added to these 

test procedures. 

K.1. The purpose of this subdivision is to request a project description, 

including a general description, goal, objectives, and location of the advanced 

demonstration project.

K.2. The purpose of this subdivision is to request vehicle data, including the 

vehicle’s model, model year, date placed in program, and vehicle identification number 

of the vehicle being demonstrated.

K.3. The purpose of this subdivision is to request the vehicle specifications 

including its class, curb weight, payload, electric range, fuel economy, fuel type, 

refueling time, electric motor output, hybrid energy storage, and fuel cell stack type, if 

applicable. This information is necessary for staff to gain more knowledge regarding 

the vehicle’s technology. 

Section L. Fast Refueling Capability

This new subdivision is being added to outline the criterion to verify a Type III, Type 

IV, and Type V ZEV’s fast refueling capability. These criterion for fast refueling 

capability have been available in Manufacturers Advisory Correspondence 06-02, and 

have now been added to these test procedures. 

§1962.2 Zero-Emission Vehicle Standards for 2018 and Subsequent Model 

Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles.

This new section 1962.2, CCR, title 13 is being added to describe the ZEV 

requirements for 2018 and subsequent model years, and is similar in style and 

structure to section 1962.1.

(a) The purpose of this subdivision explains the ZEV emission 

standard, and allows ARB’s Executive Officer to certify vehicles as ZEVs that meet the 

definition of the standard. 

(b) The purpose of this subdivision is to outline the percentage ZEV

requirements for manufacturers. 
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(b)(1) The purpose of this subdivision is to describe the percentage ZEV 

requirement, and how to calculate the number of vehicle to which the percentage ZEV 

requirements applies.

(b)(1)(A) The purpose of this subdivision is to describe the basic credit 

percentage requirement for each year that must be ZEVs, and that the ZEV 

requirement is to be based on the manufacturer’s annual NMOG production report. 

This is a report submitted by a regulated manufacturer to ARB that indicates the 

number of vehicles delivered for sale in California, and to which standard each vehicle 

is certified. 

(b)(1)(B) The purpose of this subdivision is to calculate the number of 

vehicles to which the percentage ZEV requirement is applied. This subdivision also 

describes that production averaging has no effect on a manufacturer’s size 

determination and clarifies how a manufacturer should treat vehicles delivered for sale 

by other manufacturers in their production determination.

(b)(1)(B)3. The purpose of this subdivision is to allow manufacturers to elect 

a same year calculation method if the manufacturer applies to ARB’s Executive Officer 

under the circumstances if the manufacturer’s volume of PCs and LDTs produced and 

delivered for sale in California has decreased by 40 percent from the previous year 

due to circumstances that were unforeseeable and beyond its control. A manufacturer 

may only elect this option for 2 years. 

(b)(1)(D) The purpose of this subdivision is to exclude NEVs produced by 

the manufacturer itself or by a subsidiary from a manufacturer’s applicable sales 

volume to which the ZEV requirement is applied. This prevents manufacturers 

producing only NEVs from generating a larger requirement than can be fulfilled, since 

each NEV is worth less than one ZEV credit. 

(b)(2) The purpose of this subdivision is to describe the ZEV 

requirements for LVMs. 

(b)(2)(E) The purpose of this subdivision is to describe the requirements 

and allowed usage of credits from TZEVs for model year 2018 through 2025. The 

table describes the portion of the requirement that must be met with credits from ZEVs 

and the portion of the requirement that is allowed to be met with credits from TZEVs.

(b)(2)(F) The purpose of this subdivision is to describe the requirements 

and allowed usage of credits from TZEVs for 2026 and subsequent model years.

(b)(3) The purpose of this subdivision is to describe how IVMs are 

allowed to meet their 2018 and subsequent model year requirements, which is with

credits from TZEVs.
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(b)(4) The purpose of this subdivision is to exempt SVMs from meeting 

ZEV percentage credit requirements, but to allow a SVM to earn, bank, market, and 

trade credits for the ZEVs and TZEVs it produces. 

(b)(7) The purpose of this subdivision is to describe the lead time and 

method for determining when and how a manufacturer is subject to requirements as it 

increases and decreases in size definition. 

(b)(7)(A) The purpose of this subdivision is to describe that a manufacturer 

increasing in size, either due to aggregation or through increase in the manufacturer’s 

sales, will become subject to more stringent requirements after the manufacturer has 

three consecutive sales averages above the intermediate or large volume thresholds. 

(b)(7)(B) The purpose of this subdivision is to describe that a manufacturer 

decreasing in size will become subject to less stringent requirements after the 

manufacturer has three consecutive sales averages below the intermediate or small 

volume thresholds. 

(b)(7)(C) This subdivision explains how to calculate California production 

volume in change of ownership situations. 

(c) This subdivision describes the requirements and credits for 

TZEVs.

(c)(1) This subdivision introduces the rest of the subdivision.

(c)(2) This subdivision outlines the requirements that a vehicle must 

meet in order to be eligible for credit through the ZEV regulation.

(c)(2)(A) This subdivision describes that a manufacturer must certify to 

SULEV tailpipe standards, even if the vehicle is bi-fuel, fuel flexible and dual-fuel 

capable. 

(c)(2)(B) This subdivision describes the evaporative emissions standards a 

TZEV must certify to in order to receive credit. 

(c)(2)(C) This subdivision describes the on-board diagnostic requirements 

for 150,000 miles that a TZEV must meet in order to receive credit.

(c)(2)(D) This subdivision describes the warranty a manufacturer must 

provide for each TZEV in order to receive credit. 

(c)(3) This subdivision describes the allowances a TZEV can earn. 

(c)(3)(A) This subdivision describes how a manufacturer is to calculate its 

zero emission VMT allowance. The table in this subdivision describes equations 
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manufacturers must use to determine their zero emission VMT allowance and that 

TZEVs with less than 10 all electric UDDS does not qualify for this allowance.

(c)(3)(A)1. This subdivision allows TZEVs with 10 miles all electric range on 

the US06 drive schedule to receive additional credits.

(c)(3)(E) This subdivision describes the minimum requirements for HICE 

vehicles and the amount of credit each HICE vehicle is to earn. 

(d) This subdivision describes the requirements and credits for ZEVs.

(d)(5) This subdivision describes the various types of credits for 2018 

and subsequent model year ZEVs.

(d)(5)(A) This subdivision describes how a manufacturer is to calculate the 

amount of credit earned by each ZEV, which is based on range, according to the 

equation in this subdivision. 

(d)(5)(A)1. This subdivision requires all ZEVs to have greater than 50 UDDS 

all electric miles in order to receive credit. 

(d)(5)(A)2. This subdivision caps the amount of credit that may be received 

through the equation in subdivision 1962.2(d)(5)(A) for each ZEV.

(d)(5)(E) This subdivision allows manufacturers to count hydrogen FCVs 

delivered for sale and placed in service in California to be counted toward meeting the

manufacturer’s requirement in the Section 177 ZEV states that have adopted the ZEV 

regulation. This is due to hydrogen FCVs being dependent on hydrogen 

infrastructure, which is less robust in the Section 177 ZEV states. 

(d)(5)(F) This subdivision describes how NEVs are eligible to receive 0.15 

credits. 

(d)(5)(F)1. This subdivision describes the technical specifications that NEVs 

must meet in order to receive credit. These specifications guarantee only the most 

advanced NEVs are eligible to receive credit. 

(d)(5)(F)1.a. This subdivision describes the acceleration requirements that a 

NEV must meet in order to receive credits. 

(d)(5)(F)1.b. This subdivision describes the top speed requirements that a NEV

must meet in order to receive credits. 

(d)(5)(F)1.c. This subdivision describes the constant speed range 

requirements that a NEV must meet in order to receive credits. 
100

(d)(5)(F)2.. This subdivision describes the battery requirements that a NEV

must meet in order to receive credits. 

(d)(5)(F)3. This subdivision describes the warranty requirements that a NEV

must meet in order to receive credits. 

(d)(5)(F)4. This subdivision describes the charging requirements that a NEV

must meet in order to receive credits. 

(d)(5)(G) This subdivision describes the requirements manufacturers must 

meet in order for BEVxs, which is a BEV with an APU for back-up power to be eligible 

to receive credit.

(d)(5)(G)1. This subdivision describes the emissions requirements a BEVx 

must meet in order to receive credit to ensure the vehicle is low-emitting under all 

circumstances.

(d)(5)(G)2. This subdivision requires the vehicle’s UDDS all electric range 

after the APU first starts is less than or equal to the vehicle’s all electric UDDS test 

range prior to the APU start. The subdivision also clarifies that the APU may not start 

until the battery is being full depleted. These requirements ensure that the APU

functionality is limited and that the unit is not relied upon instead of the battery electric 

power.

(d)(5)(G)3. This subdivision requires that in order to receive credit, BEVxs 

must have at least 80 miles UDDS all electric range.

(g) The purpose of this subdivision it to describe the generation and 

use of credits, as well as the calculations of penalties if the manufacturer is unable to 

make up a deficit in meeting its ZEV obligation. 

(g)(1) This subdivision allows manufacturers to bank ZEV credits 

produced in excess of its requirement.

(g)(2) This subdivision describes how manufacturers are to calculate 

and maintain credits earned under this regulation.

(g)(2)(A) This subdivision describes that credits from ZEVs shall be 

expressed in terms of credits, and that those credits may be applied toward meeting a 

manufacturer’s ZEV requirement.

(g)(2)(B) This subdivision describes that credits from TZEVs shall be 

expressed in terms of credits, and that those credits may be applied toward meeting a 

manufacturer’s ZEV requirement.
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(g)(2)(C) This subdivision describes that a manufacturer’s various credits 

will be maintained in separate accounts within the ZEV bank.

(g)(2)(D) This subdivision describes how ZEV credits and debits are to be 

rounded. The language is meant to provide clarification and to avoid differences in 

calculating ZEV credits and debits.

(g)(3) This subdivision allows manufacturers to earn credit for MDVs 

produced as ZEVs or TZEVs, and apply those credits towards its ZEV obligation.

(g)(4) This subdivision outlines how manufacturers other than LVMs are 

to earn advanced demonstration credits for ZEVs and BEVxs.

(g)(4)(B) This subdivision describes the requirements and limits for 

manufacturers other than LVMs that place ZEVs in advance demonstration programs, 

and earn credit as if the vehicle was delivered for sale. 

(g)(5) This subdivision describes how ZEV credits earned by vehicle 

placed in transportation systems may be used in 2018 and subsequent model years.

(g)(5)(C) This subdivision describes the limits on the use of transportation 

system credits for meeting a manufacturer’s requirement.

(g)(5)(C)1. This subdivision describes the treatment and limits on the use of 

transportation system credits earned by ZEVs and BEVxs for meeting a 

manufacturer’s requirement. 

(g)(5)(C)2. This subdivision describes the treatment and limits on the use of 

transportation system credits earned by TZEVs for meeting a manufacturer’s 

requirement. 

(g)(6) This subdivision describes how a manufacturer submits credits for 

compliance with the regulation to ARB’s Executive Officer, and how ZEV credits can 

be used to meet a manufacturer’s obligation.

(g)(6)(A) This subdivision describes how discounted PZEV and AT PZEV 

credits and NEV credits may be used to meet a portion of a manufacturer’s obligation, 

and that these credits expire after model year 2025.

(g)(6)(B) This subdivision describes how BEVx credits may be used to 

meet a portion of a manufacturer’s obligation. 

(g)(6)(C) This subdivision describes how a manufacturer applies for, 

generates, calculates, and uses GHG-ZEV over compliance credits.
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(g)(6)(C)1. This subdivision allows a manufacturer to apply to ARB’s 

Executive Officer to be eligible to generate GHG-ZEV over-compliance credits, no 

later than May 1, 2018. 

(g)(6)(C)1.a. This subdivision disqualifies a manufacturer with any outstanding 

2017 and previous model year debits from compliance with the GHG fleet standards, 

according to sections 1961.1 and 1961.3.

(g)(6)(C)1.b. This subdivision disqualifies a manufacturer with any outstanding 

2017 and previous model year debits from compliance with the ZEV regulations, 

according to sections 1962.1.

(g)(6)(C)1.c. This subdivision requires a manufacturer to submit documentation 

of its projected product plan to show systematic over compliance by at least 2.0

gCO2/mi of its section 1961.3 requirements for 2018 through 2021 model year, and 

commitment to do so in each year.

(g)(6)(C)2. This subdivision describes how a manufacturer is to calculate its

over compliance with section 1961.3, which will be based on the previous model year. 

(g)(6)(C)2.a. This subdivision requires that a manufacturer must over comply 

with section 1961.3 by at least 2.0 gCO2/mi and describes the equation used for 

calculating GHG-ZEV over compliance credits for use towards meeting a 

manufacturer’s ZEV requirement. 

(g)(6)(C)2.b. This subdivision prohibits the use of multipliers earned under 

subdivision 1961.3(b)(9) to calculate a manufacturer’s GHG-ZEV over compliance 

credits. 

(g)(6)(C)2.c. This subdivision prohibits the use of banked gCO2/mi credits to 

be used in the GHG-ZEV over compliance credit calculation. 

(g)(6)(C)3. The purpose of this subdivision to limit the way GHG-ZEV over 

compliance credits may be used to meet a manufacturer’s requirement in model years 

2018 through 2021, as well as the limits on how the GHG-ZEV over compliance 

credits may be used towards meeting the minimum portion of a manufacturer’s 

requirement that must be met with ZEVs. This subdivision also prohibits a 

manufacturer from banking these credits for use in subsequent model years, and 

requires a manufacturer to remove the gCO2/mi used to calculate the GHG-ZEV over 

compliances credits from its GHG compliance bank, and cannot bank for future 

compliance toward 1961.3. 

(g)(6)(C)4. This subdivision describes what is required of a manufacturer 

when submitting GHG-ZEV over compliance credits. 
103

(g)(6)(C)4.a. This subdivision provides that a manufacturer who is granted the 

ability to generate GHG-ZEV over compliance credits and fails to over-comply by at 

least 2.0 gCO2/mi will be subject to the full ZEV requirements for the model year and 

future model year, and will no longer be eligible to receive GHG-ZEV over compliance 

credits. 

(g)(7) This subdivision describes the requirement and time limit to fulfill 

a ZEV deficit, as well as the penalties a manufacturer would be subject to if the 

manufacturer failed to make up a ZEV deficit. 

(g)(7)(A) This subdivision describes the amount of time – one year – a 

manufacturer has to fulfill a ZEV obligation deficit, and that only credits from ZEVs 

may be used to fulfill a manufacturer’s deficit.

(g)(8) This subdivision describes the penalties for failure to comply with 

the ZEV regulation, and the equation used to calculate a manufacturer’s penalty 

because a manufacturer incurs a penalty if out of compliance with the regulation. 

(h) This subdivision describes the documents used to certify and 

determine compliance with the ZEV regulation. 

(h)(1) This subdivision names the test procedures used for certification

to determine compliance with the ZEV regulation: “California Exhaust Emission 

Standards and Test Procedures for 2018 and Subsequent Model Zero-Emission 

Vehicles and Hybrid Electric Vehicles, in the Passenger Car, Light-Duty Truck and 

Medium-Duty Vehicle Classes.”

(h)(2) This subdivision names the test procedures for determining 

compliance with NEV requirements.

(i) This subdivision holds the definitions for section 1962.2.

(i)(1) This subdivision defines “auxiliary power unit” because range 

extended BEVs are equipped with an auxiliary power unit.

(i)(2) This subdivision defines “charge depletion range actual” because 

a TZEVs charge depletion range actual is used to calculate its zero emission VMT

allowance.

(i)(3) This subdivision defines “discounted PZEV and AT PZEV credits” 

because manufacturers are allowed to use discounted PZEV and AT PZEV credits in 

meeting a portion of their overall requirement.

(i)(4) This subdivision defines “energy storage device” because a 

TZEV’s extended warranty covers the vehicle’s energy storage device.
104

(i)(5) This subdivision defines “hydrogen fuel cell vehicle” because 

manufacturers are allowed to meet a portion of their obligation with hydrogen fuel cell 

vehicles, and these vehicles are eligible for subdivision 1962.2(d)(5)(E).

(i)(6) This subdivision defines “hydrogen internal combustion engine 

vehicle” because manufacturers are allowed to meet a portion of their obligation with 

hydrogen internal combustion engine vehicles.

(i)(7) This subdivision defines “majority ownership situations” because 

manufacturers are to aggregate their sales with another manufacturer for 

determination of size definition in majority ownership situations.

(i)(8) This subdivision defines “manufacturer US PC and LDT Sales” 

because manufacturer’s US PC and LDT sales are used to calculate a manufacturer 

GHG-ZEV over compliance credits.

(i)(9) This subdivision defines “neighborhood electric vehicles” because 

manufacturers are allowed to meet a portion of their obligation with neighborhood 

electric vehicles.

(i)(10) This subdivision defines “placed in service” because in order for 

hydrogen FCVs to be eligible for subdivision 1962.2(d)(5)(E), the vehicles must be 

placed in service.

(i)(11) This subdivision defines “proportional value” because this value is 

used to calculate the ratio applied to credits earned in Section 177 ZEV states for 

subdivision 1962.2(d)(5)(E).

(i)(11) This subdivision defines “range extended battery electric vehicle” 

because manufacturers are allowed to meet a portion of their obligation with range 

extended BEVs.

(i)(12) This subdivision defines “section 177 state” because the federal 

Clean Air Act allows other states to adopt this ZEV regulation and the term is used 

throughout subdivision 1962.2(d)(5)(E) .

(i)(13) This subdivision defines “transitional zero emission vehicle” 

because manufacturers are allowed to meet a portion of their obligation with 

transitional zero emission vehicles.

(i)(14) This subdivision defines “zero emission vehicle” because 

manufacturers are required to comply with the regulation with zero emission vehicles.

(i)(15) This subdivision defines “zero emission vehicle fuel” because this 

phrase is used in the definition for transitional zero emission vehicle.
105

(j) This subdivision lists the abbreviations used throughout section 

1962.2.

(k) This subdivision ensures that each section of 1962.2 is severable, 

meaning that if a section is to be deemed unenforceable, the remainder of the section 

remains in full force and effect.

(l) This subdivision requires that records for the vehicles subject to 

the ZEV regulation be subject to public disclosure. 

(l)(1) This subdivision requires that a manufacturer’s annual production 

data and credits per ZEVs and TZEV produces are subject to public disclosure.

(l)(2) This subdivision outlines the details for a manufacturer’s annual 

credit balance. 

(l)(2)(A) This subdivision requires individual ZEV credit balances from 

each vehicle category be subject to public disclosure.

(l)(2)(B) This subdivision requires credits earned for vehicles placed in 

advanced demonstration programs be subject to public disclosure.

(l)(2)(C) This subdivision requires credits earned for vehicles placed in 

transportation systems be subject to public disclosure.

(l)(2)(D) This subdivision requires credits earned, including credits 

purchased or traded with another party, including the parties themselves be subject to 

public disclosure.

List of Changes to “California Exhaust Emission Standards and Test 

Procedures for 2018 and Subsequent Model Zero-Emission Vehicles and Hybrid 

Electric Vehicles in the Passenger Cars, Light-Duty Trucks and Medium-Duty 

Vehicle Classes”

This test procedure is included by reference in section 1962.2, and contains an exact 

copy of the regulatory text, including the amendments being proposed in section 

1962.1 in Section C. Sections A, B, D, E, F, G, H, I, J, K, and L are identical to those 

in the “California Exhaust Emission Standards and Test Procedures for 2009 through 

2017 Model Zero-Emission Vehicles and Hybrid Electric Vehicles in the Passenger 

Cars, Light-Duty Trucks and Medium-Duty Vehicle Classes,” as amended in this 

rulemaking. 

§1962.3 Electric Vehicle Charging Requirements

(a) This subdivision describes the vehicles subject to the requirements of 

section 1962.3. This subdivision is being amended to include range extended BEVs, 
106

to make this section applicable to NEVs starting in model year 2014, to delete the 

requirement that only ZEVs earning more than one credit must comply with these 

requirements, and to remove hybrids only capable of Level 1 charging from the 

requirement, because these vehicles are not anticipated in the future. 

(b)(1) This subsection specifies the definitions applicable to section 1962.3. 

This subdivision is being amended to include the definitions from 1962.2 because this 

part of the CCR holds requirements for 2018 and subsequent model years.

(b)(2) This subsection defines Level 1 charging. This subdivision is being 

deleted because vehicles only capable of Level 1 charge are not anticipated in the 

future.

(c)(1) This subdivision specifies the requirements for an applicable vehicle’s on 

board charger. This subdivision is being clarified to reflect the original intent that a 

vehicle’s charging port and system is also required to meet the specific AC Level 1 

and Level 2 charging contained in Society of Automotive Engineers J1772, JAN2010, 

titled “SAE Electric Vehicle and Plug in Hybrid Electric Vehicle Conductive Charge 

Coupler”. This subdivision has also been clarified from 3.3 kilovolt amps to kWs to be 

more precise, and an alternative is being added to allow vehicles with smaller battery 

packs to comply with the section 1962.3 requirements if the vehicle is able to fully

charge in less than 4 hours.

Health & Safety Code sections 38562 and 43018.5 are being added as references to 

reflect the contribution of those sections towards the GHG emission reductions 

referenced in sections 38562 and 43018.5.
107

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Documents Incorporated By Reference in §1962.1, 1962.2, and the incorporated 

test procedures, and 1962.3, Title 13, California Code of Regulations

SAE J2841: “Utility Factor Definitions for Plug-In Hybrid Electric Vehicles Using 

Travel Survey Data” (March 2009)

SAE J1772: “SAE Electric Vehicle and Plug in Hybrid Electric Vehicle Conductive 

Charge Coupler” (January 2010)

SAE J2572: “Recommended Practice for Measuring Fuel Consumption and 

Range of Fuel Cell and Hybrid Fuel Cell Vehicles Fueled by 

Compressed Gaseous Hydrogen” (October 2008)

ETA-NTP002: “Implementation of SAE Standard J1666 May 93: Electric Vehicle 

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(February 2008) 

ETA-NTP004: “Electric Vehicle Constant Speed Range Tests” (February 2008)

Spreadsheets Used for Tables and Figures

On October 11, 2009, AB 1085 was signed into law and became effective on January 

1, 2010. The legislation was subsequently amended by SB 855, which was signed into 

law and became effective on October 19, 2010, and is intended to provide all of the 

information relied on by ARB staff in proposing the adoption, amendment, or repeal of 

a regulation, including all information related to, but not limited to, air emissions, public 

health impacts, and economic impacts. The information will be posted on the 

following 
114

website: http://www.arb.ca.gov/msprog/clean_cars/clean_cars_ab1085/clean_cars_ab

1085.htm